News Review: Niku aquired by Computer Associates
NIKU: A new future with CA?
This News Review was amended subsequent to the original publication.I have had a lot of time for Niku and it's Clarity IT Governance software. I have been both an end-user and a Niku Administrator. So when I heard that CA had taken over Niku, I was startled, and confused. Looking back, I should have seen it coming, what with the joint marketing agreement back in January.
I am perplexed by the motivations on both sides.
What are CA trying to achieve?
Why did they decide to pay $350 million for Niku?
On the face of it, Niku is just the "Investment completed" company which CA typically purchase. They have spent literally millions on taking the old ABT code (remember Project Manager Workbench?) and morphing it into a modern web-based tool for IT Governance. In so doing, they have almost single-handedly defined the market for what Gartner called the Middle Office, or the idea of Programme Management control, billing project reporting and alignment to strategy.
But much more needs to be done. Although Clarity is ahead of the competition in both delivery and vision, there is still some additional investment required to make this a world-beating concept. I am sure that, given time, Niku have an application and solution approach which would reap big dividends in the future.
My guess, for what it's worth, is that CA have simply seen the revenue stream and realised that here is a market which they just must get involved in. Or risk the other big boys out-flanking them.
Why did Niku agree?
More perplexing is why Niku have decided to agree to this.
Niku were a "one product company". This can have it's dangers, but at the same time the high degree of specialism and focus mean that you can really penetrate the market place. With CA, Niku will just be one product in the sales portfolio.
However, the advantage of a CA takeover is the massive sales effort which can be put behind the product. Maybe that is what Niku are keen to become part of.
Another aspect of the Niku product set is that this is a fairly services-heavy solution. That is no criticism of the Niku software. Instead, it reflects the fact that introducing IT Governance in a big way involves processes and methodology, as well as just software. Maybe the importance of the Services Industry was significant in these discussions.
The Future
If CA hope to get a revenue stream from Niku, they will have to do a number of things:
- Maintain and build on the existing partnerships with BT and others which generate the sales revenue and professional services "lock in" to the product
- Persuade existing customers to retain their investment, and not shift to Artemis, Primavera or other competitors.
- Put in the necessary R&D to enhance the product to make it what it really needs to become
The problem I foresee is that the IT Governance market is not CA's typical market area. Maybe there will be lots of training courses for CA sales people over the next few months, as they get to grips with the new concepts.
Does this mark a change of direction for CA? It could be. However, if any company is able to advance in multiple markets at the same time, CA can.
Reviewed by Dennis Adams in June 2005