CSC execs plot ‘fundamental rethink’

September 16, 2012

Computer Sciences Corp. executives took their turnaround plan on the road last week, traveling to an investors’ event in New York to detail their strategy for remaking the technology giant.

“Over time, we lost control of the financial systems, we lost control of the discipline,” said Mike Lawrie, the company’s new chief executive. “We lost our identity. We lost what we really stood for in the marketplace.”

Lawrie has been increasingly vocal about CSC’s straits as well as the new leadership team and strategy in place.

In his address last week, Lawrie focused on a three- to five-year window, in which CSC must reduce costs by about $2 billion, grow its base of clients and improve its profit margins.

Lawrie said CSC must move into profitable areas such as industry-specific business process services and applications and away from traditional infrastructure work such as data centers, which yields small profits but makes up a large chunk of CSC’s revenue.

“We need to shift to where the money is, and we have been slow to do that,” he said.

He said CSC will focus on growing its cloud computing, cybersecurity and big data offerings. Cybersecurity work, for instance, provides about $600 million in revenue now; CSC would like to grow it to between $1 billion and $1.5 billion within three to five years.

Lawrie said CSC is also seeking to standardize more of what it offers customers.

CSC has seen “an enormous proliferation of customized contracts and customized solutions,” he told investors. “That customization leads to not only higher costs but it leads to great difficulty in execution because you are never executing anything more than once.”

He acknowledged that the company is taking on dramatic changes, which come with risks.

“This is not cosmetic,” he said. “This is a fundamental rethink of the business.”

EADS, BAE Systems considering merger

The news that London-based BAE Systems and Paris-based European Aeronautic Defence and Space are discussing combining their businesses rocked the global aerospace industry.

But when it comes to the companies’ U.S. units — both of which are based locally, the effect will likely be much smaller.

If the deal goes through, “they’ll probably just fold [EADS’] North American operations into BAE North America, and that’s not going to really change the competitive landscape for the other contractors,” said Byron Callan, a director at District-based research firm Capital Alpha Partners. “I don’t see it as one of these landscape-altering deals for the U.S. defense sector.”

Loren Thompson, a defense industry consultant who works with BAE, agreed, noting that EADS is a small player in the U.S. military market.

Northrop Grumman, Sotera make leadership changes

Falls Church-based Northrop Grumman last week appointed Ginger Wierzbanowski vice president of space, missile defense, advanced technology and ground programs. She takes over from John R. Landon, who is retiring.

Wierzbanowski came to Northrop last year as vice president of government relations for special projects. She has also worked for Boeing and Science Applications International Corp. and had a 20-year career in the Air Force.

Herndon-based Sotera Defense Solutions last week appointed Jennifer H. Felix, who previously worked at Deltek and Vangent, as chief financial officer.

After Vangent was acquired by General Dynamics, she became financial planning director overseeing mergers and acquisitions within GD’s information systems and technology unit. She had previously been corporate controller for Vangent.

Engility restructures, makes employee cuts

Chantilly-based Engility, a recent spin off from New York-based L-3 Communications, last week said it is downsizing its workforce and restructuring the business.

The government services contractor will offer a voluntary employment separation program to some management and administrative employees and then likely make additional reductions. Engility said the cuts, which should be complete by the end of the year, are expected to total less than 4 percent — or 320 — of its 8,000 employees.

Additionally, Engility said that as of Jan. 1 it will function as a centralized operating group with four business units, each focused on a different set of services: training and mission support; technology; engineering and program support; and international development.

Its professional support services and mission support services units will be eliminated.

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