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Autodesk: Bubbling Over

How the dot-com bust helped one company boom. Also: a look at vendor consolidation; technology that solves trffic jams; the current state of Web conferencing; the fate of pricing software; and more.

It’s not every software company that can point to the dot-com bust as a good thing, especially when a good portion of its senior management went down in flames. But that’s the case at Autodesk Inc., the $1.2 billion maker of computer-aided design, modeling, and collaborative software products. Luckily for the company, the managers in question worked at other firms when the bubble burst and learned valuable lessons that have since reshaped Autodesk’s culture. “I worked at two dot-com companies and learned two lessons,” says Autodesk CFO Al Castino. “First, I learned that you can sometimes make a lot of money for doing nothing, which is nothing to brag about. My second experience was more useful because it was at a company that had great technology but was struggling, and we had to be extremely aggressive about waste and costs.”

Castino had also worked at Hewlett-Packard, Sun, and PeopleSoft, so when he was hired at Autodesk in 2002, he brought a mix of experience to the job. “When the bubble burst,” he says, “our CEO [Carol Bartz] knew there were a lot of good people out there, so she brought in some new blood, and many of us in turn brought in new people.”

That entering class, Castino says, shared a valuable trait: an impatience with waste. Prompted by a McKinsey benchmark study that showed that the company’s productivity and processes were also nothing to brag about, Autodesk launched a number of productivity initiatives that, in conjunction with a long-range product-development strategy, have helped the company increase revenue and profits substantially, which has boosted its stock price to the high $30 range. That has helped rally the troops, Castino says, because “many people here thought the stock had reached a permanent ceiling in the high teens.” Castino readily agrees that change is never easy, and says that while IT can help (see “Building a Better Workforce”), ultimately it comes down to good management.

Toward that end he made a rather unusual contribution: he developed a course on “process analysis and design” that is being taught to finance and operations staff worldwide, and which imparts the lessons he learned in manufacturing to a sector whose high margins tend to discourage such thinking. As Castino says, “Growth hides many sins, including poor productivity.”

As useful as new blood may be, however, Castino is quick to point out that change requires a mix of veterans and new players, and broad commitment. “Everyone has three-year productivity goals,” he says, “and no one thinks that a rise of, say, 20 percent in revenue means that their budget will increase 20 percent.” In fact, much of the productivity push at Autodesk hinges on consistently widening the gap between costs and revenue. Not that it’s all about belt-tightening; some of the savings go into an investment fund that’s doled out for promising growth opportunities.

All Together Now, but with Differences

A recent survey by IDC confirmed what most people have known for some time: companies want to consolidate on fewer IT vendors. But the research firm uncovered an interesting schism between IT execs and line-of-business (LOB) leaders. When asked why they want to consolidate, 30 percent of the LOB executives said they want greater accountability from vendors — that is, the proverbial “one throat to choke.” But that rationale was of interest to only 8 percent of IT executives. Their top answer was “get higher quality of service.” Both camps seemed to agree, however, on what is not important: only 20 percent of the LOB execs said that “getting better pricing” was their prime motivator, and only 17 percent of IT managers picked that as their top reason.

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