Read the case given below and answer the questions given at the end.

COMPUTER ASSOCIATES- MOVING TOWARDS TERRITORY

MANAGEMENT

Computer Associates changes focus from direct sales to territory management, was the
headline in a prominent magazine for value added resellers and technology integrators in
December 2004. This referred to the territory management efforts of Computer Associates
International Inc. (CA), a multi- billion-dollar management software company based in the
United States. CA operated in more than a hundred countries, providing software and
services for operations, security, storage, life cycle, and service management. Its clients
included around 95% of Fortune 500 companies and various government organizations as
well. CA had been given the ISO 9002 certification for its adherence to quality standards.
Since its inception, CA had built up a multitude of products in mainly mainframe, software,
enterprise management systems, and client server tools. However, the customer perception of
these products was not clear and they were very sceptical about entering into a long-term
commitment with the company. To add to it, CA had the reputation of being an inflexible
vendor and had an unsatisfactory relationship with its partners. In May 2002, under the
leadership of Sanjay Kumar, its CEO, CA decided to compensate the direct sales force if they
dealt with customers through the channels. This move was expected to lessen the conflict
between the direct sales force and the channel partners. Channels could openly make use of
sales force resources due to clarity on the compensation front. In addition, the company also
entrusted the issues concerning VARs and the direct sales force to two different executives.
In November 2004 John Swainson (Swainson) joined CA as President. Swainson realized
that CA had around 500 products to offer which would be difficult for the sales force to
manage and sell in the market place. Therefore, they had to be narrowed down to a set of
brands for easy selling. Next, to organize the selling, they needed to plan the channel partners
and focus on designing territories. There was also a need for building relations with channel
partners and ensuring more cooperation between them and the direct sales force. According
to Valeh Nazemoff, director of business development at DataTech Enterprises, a CA
enterprise partner, CA is a product company, [Swainson] needs to make sure the direct sales
team works with the channel on a more strategic basis. Keeping all these factors in mind, in
December 2004, CA decided to implement a territory plan similar to the one it had
implemented in Europe. In Europe, it had moved all the components of the business under
one territory manager who was responsible for the growth of business in that region. The
scope of his/her responsibilities included channel sales and he/she was evaluated on the basis
of an annual increase in sales. The first step toward implementing this model in North
America was a clear-cut message to the direct sales force that they would have territory
responsibility as against individual named accounts. This meant that the sales force was also
responsible for revenues from channel partners, which in turn meant they would have to cater
to the resellers. For this purpose, CA hired 100 new field partner managers who helped
develop a relationship with enterprise solution providers as well as system integrators such as
Accenture. These partners were to be aligned vertically with CAs product lines -- Unicenter,
eTrust, and BrightStor. In short, there were three sales teams reporting to one territory
manager in each territory. However, CA was well aware of the problems it would face during
this transition. First, proper channel partners had to be taken into the fold, which was a
difficult task as there was a paucity of experienced people in the specialized enterprise
management field. Second, with direct sales as well as channel partners, there was bound to
be a lack of cooperation. The sales force had to be motivated to have a positive culture in
dealing with the partners. Third, there could be a channel conflict with a parallel structure of
channel partners and direct sales. Although this was not an easy transformation for the
company, Swainson was quite confident about achieving success. Swainson expected that
30% of CAs revenues in the fiscal year 2006 would be through the channel.

Questions :

1. CA had a system whereby its salespersons looked after a thousand named accounts with no
territory responsibility. Compare and contrast this system with its new model, bringing out
the advantages and disadvantages in the new system.

2. With new territory allocations, the sales team became responsible for revenue generated by
the resellers or channel partners and had to work in tandem with them. Bring out the
challenges faced by CA in this regard and the possible solutions to combat them.