Let Bill Gates of Microsoft be the official spokesman for the Info Age. Charles Wang would rather make money. Quietly, he’s built his 19-year-old software house into one of the biggest (and perhaps best) companies you’ve never heard of. With revenues of $2.6 billion, Computer Associates is the world’s second-largest independent software supplier, after Microsoft itself. Clearly, obscurity pays. A dollar invested two years ago in Microsoft would be worth $2.26 today; if you’d bought Computer Associates, you’d have $2.41. Now on the verge of completing a $1.7 billion takeover of Legent Corp., the biggest acquisition in software history after IBM’s $3.5 billion deal for Lotus Development Corp., Computer Associates is finally moving onto center stage.
How did it manage to hide so long? It’s tempting to reply, “geography.” Forget the madding technologic crowds of Silicon Valley and Seattle. For Computer Associates, the hinterland of Islandia, Long Island, about an hour’s commute east of New York City, does just fine. Wang (pronounced “Wong”) grew up in the region, after immigrating from China 42 years ago at the age of 8, and he sees no reason to move. After all, jokes this diehard basketball fan: where else could you see the Knicks? But there’s another reason for CA’s obscurity. Simply put, the company just isn’t . . . cool.
These days, techno-types like former Apple chief John Sculley are often familiar faces. But Wang isn’t aiming for stardom. His company doesn’t do interactive games, like Myst or Doom II. It doesn’t shrink-wrap electronic encyclopedias like “Encarta” or churn out the trendy “educational” fare that has prompted millions of Americans to rush out and buy expensive PCs for their kids. And Wang himself flat-out refuses to gad about playing high-tech visionary, as so many New Age CEOs love to do. The wonders of the dawning digital era? Interactivity? “Bull! It’s hype,” he says bluntly. Technology isn’t fun and games. For business folks who buy his software, Wang offers simple advice: if a product doesn’t add directly to your bottom line, don’t buy it.
That brand of no-nonsense practicality rules at Computer Associates. It has flourished for years by providing what Wang calls “mission critical” software, the backbone of big business. “We do all the stuff you don’t see,” he says. Ira business were a building, Computer Associates would be providing the foundation, the plumbing and the wiring. Major automakers use CA’s software to maintain inventories and order spare parts. The U.g. Customs Service uses it to track tens of millions of travelers entering and and leaving the country each day. NEWSWEEK uses it to service 8 million-odd subscribers.
So long, Big Iron: That isn’t as sexy as seeing your brand name on the shelves at Egghead. But it’s big money, even so. This spring Computer Associates reported yet another record sales quarter. Earnings are growing at a 37 percent yearly clip; the company’s shares are trading near an all-time high of $73. If there is a cloud on this bright horizon, it’s this. Three quarters of CA’s revenue comes from sales of mainframe software, yet that business is slowly but surely eroding. Across industry, the trend is away from “big iron” and toward more flexible networks of desktop PCs and midrange computers. Techno-geeks call this “client server” computing, and Computer Associates is scrambling to make the transition. It aims to shave its dependence on mainframe revenues to roughly half over the next few years. By the end of the decade, Wang hopes, the figure will be closer to 25 percent.
Meanwhile, CA is pioneering another frontier. Given the array of choices in today’s computing world, technologies too often end up competing with one another. One workgroup might run on IBM software, for instance, another on Microsoft Windows. One corporate division might work off mainframes, another off PCs. Pulling them together into a seamless system is one of the the biggest challenges in the workplace. Microsoft would like to solve the problem by getting everybody to use its software. Computer Associates, on the other hand, has come up with a product called Unicenter. Essentially, it integrates technologies, smoothing over in-compatibilities and streamlining information flows–and, in time, reducing the need to invest in such newfangled technologies as, say, Windows 95. Sales exceeded $300 million last year, making it one of the most successful releases ever.
Contrast Computer Associates with its larger rival. Microsoft’s sprawling “campus” consists of a dozen low-slung buildings arrayed in grassy quadrangles amid the forests outside Seattle. CA’s headquarters is a huge glass-box tower, rising starkly from what used to be treeless farmland. The latter looks intense and hive-like, the former open and relaxed. But inside, the comparison reverses itself. Walk into a meeting at Microsoft, and the atmosphere is confrontation. Small task forces of designers and developers seek to “win their point of view,” in Micro-lingo, during grueling cross-examinations, called “Bills,” with Gates himself. The confabs in Islandia are altogether different. There’s the same expertise, focus and emphasis on small teams operating with maximum autonomy. But instead of intellectual muscle-straining, the tone is conversational, easy, collaborative. “Time out, time out, time out,” says the company’s head of research and development, Russell Artzt, when the talk gets too heated. “OK, Russo,” his Unicenter project leader casually replies. When Wang enters the conference room, the team barely pauses in its work. He listens. Suddenly, Wang’s rocking, rocking, rocking in his chair, a human automaton. “I’m Bill!” For those in the know, it’s a laughing parody of Gates.
“Evolution, not revolution.” That’s Wang’s mantra, duly recorded in his book, “Techno Vision,” a self-styled survival guide to the digital era. In it, Wang warns that U.S. companies have “wasted” more than $1 trillion over the past decade on computer hardware and software they flat-out don’t need. He decries trendy information managers who drop one expensive system for another almost as readily as they change their suits. “Technology is an investment,” he says again and again. “You don’t throw investments away. You make them work!” Yet when it comes to certain technologies, Wang’s no slouch. Take a look at the day-care center at CA headquarters. It’s bright, shiny and new, staffed by credentialed teachers and nurses and chock-full of the very best toys and books and cribs. Best of all, the fees are subsidized by the company. “It’s my pride and joy,” says Wang. There’s a message there. When in doubt about how to invest, says Wang, put your money in people. “They’re the best software there is.”
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