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csg3p022.txt
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1992-10-26
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Computer Sciences Corporation
Company Statistics
Corporate Headquarters: El Segundo, California
Chairman and President: William R. Hoover
1991 Total Revenues: $1.74 billion
1991 Total Revenues U.S.: $1.5 billion
Number of Employees Worldwide: 25,000+
Number of Employees U.S.: 23,500
Number of Technical Professionals: 15,000
Number of Offices Worldwide: 300
Number of Offices U.S.: 275
Service Products
PROFESSIONAL SERVICES
Computer Sciences Corporation (CSC) is the largest independent
professional services company in the information technology industry.
CSC manufactures no equipment, nor does it market standalone packaged
software products. Its services range from consulting to design,
engineering, integration, and operation of computer-based systems and
communications systems.
Service Mission/Target Market
PROFESSIONAL SERVICES
CSC sees its goal as providing clients access to the best technology in
the world. The company sums up its basic operating principles as
follows:
o Broad multi-disciplinary professional team approach
o Participating technical management
o Emphasis on close liaison and quick reaction
o Freedom from conflicting interests
o Tight project and overhead cost control
o Project security
In addition, CSC believes it is in the company's interest to educate its
clients. In 1991, to further that goal the company introduced the "CSC
Exchange," a week-long series of seminars on major technology issues
that drew nearly 600 senior executives from 300 firms. The company is
increasing its emphasis on multi-client meetings to expose senior
executives to its wide range of commercial offerings. CSC sponsors
similar types of forums for exchanging information on IT industry trends
and developments for the public sector as well.
CSC is a leading systems integrator and software developer, and is the
dominant computer-services company in the federal market. The company
claims extensive expertise in the traditional lines of professional
services, i.e., application development, system planning and design,
systems integration, facilities management and maintenance, and
communications network design and operation. CSC's special expertise is
in large, complex systems, having successfully completed many such
projects for various federal agencies, particularly, but not limited to,
NASA and the Department of Defense (DoD). Though the distribution
varies, the typical dollar value of CSC government contracts fall in the
$75 million to $150 million range.
CSC also lays claim to a strong consultancy and systems integration
program in the commercial market. Whereas projects for federal clients
are generally large, commercial engagements tend to be smaller in scope
and the average dollar value falls in the $10 million to $25 million
range. The company has major operations in professional services, claims
processing, credit services, and network services. It is currently
building a strong reputation for management consulting and business re-
engineering in several vertical markets.
As the company admits, CSC's position in the commercial market does not
approach its dominance in the federal arena . Over the past few years
CSC has attempted to increase penetration into commercial markets, not
only through internally-generated expansion, but also by way of a
program of strategic joint ventures (such as its one with Equifax in the
consumer credit field) and acquisitions in the U.S. and Europe. To build
a stronger presence as a global provider of IT services, the company
will likely continue this strategy of pursuing acquisitions around the
world. (CSC tends to acquire small firms in the $15 million to $20
million range.) CSC's award of the $3 billion outsourcing contract with
General Dynamics has very dramatically served to tip the scales of the
balance of CSC's business in favor of the commercial market.
The federal government has traditionally been CSC's largest customer,
and remains so today. Federal revenues for 1991 rose 8%, topping $1
billion for the first time in the company's history. The company expects
federal revenues to increase, even in a time of declining spending, as
the government looks to enhance productivity and efficiency by
implementing leading edge technologies, an area where CSC is a
recognized leader. Clients also include Fortune 500 corporations, medium
and small-size businesses, and a wide range of government agencies.
Service Offerings
PROFESSIONAL SERVICES
CSC is a major software developer and systems integrator, managing
hundreds of millions of dollars of contracts annually. The company does
not manufacture any equipment, nor does it market packaged software
products except as part of a project for clients. CSC believes this
gives the company objectivity when it comes to designing and configuring
systems for clients.
The majority of CSC's revenues come from systems integration services,
professional services and systems operations.
CSC defines its service offerings as follows:
o Management Consulting: Management consulting involves those
services that help clients define and achieve their organization's
goals. These include consulting on corporate strategy,
organizational re-engineering, management education, and client-
sponsored research services. Does not include consulting on
specific information systems.
o Processing Services: Processing services includes revenues from
claims processing, credit-related services, income tax return
processing, transaction processing, data entry and backup recovery.
o Professional Services: Professional services includes such tasks as
software and systems development, consulting on information system
development, project assistance, feasibility and cost trade-off
studies, data analysis, documentation, contract programming,
education and training, communications engineering, software
engineering and configuration management.
o Systems Integration: Systems integration is the process of applying
diverse management and technical skills to provide a unique system
solution to a client problem. Such projects may involve the
conversion of existing systems to a new hardware/ software
environment; changing the communications environment of an existing
system; upgrading batch systems to a data base environment;
development of an entirely new application; or a combination of all
of these. Integration usually involves the products of multiple
vendors and interactions among elements of hardware, software and
communications. CSC will normally be the lead or sole contractor
responsible for the project.
o Systems Operations: Systems operations is the fulfillment of a
client's complete information processing requirements under a
multi-year contract, whereby CSC performs numerous tasks, such as
software development, network management, processing and professional
services. Operations may be at CSC's or the customer's
site, and the facility may be owned by either CSC or the client
(Facilities management/outsourcing).
o Turnkey: Turnkey products involve the sale and lease of hardware
and CSC software packaged as an application solution, and includes
revenues from support functions.
CSC claims great breath in its offering of technology expertise. There
are several areas of technology in which CSC has made specific
investments including document imaging, super-computing and high-
performance computing systems, geographic information systems (GIS),
logistics, training systems, open systems architecture and visualization
techniques.
Service DeliveryService DeliveryService Delivery
PROFESSIONAL SERVICESPROFESSIONAL SERVICESPROFESSIONAL SERVICES
CSC has more than 25,000 employees worldwide, of which over 15,000 are
highly-trained technical professionals representing a broad range of
experience. The company operates 300 offices and facilities in the U.S.
and Europe. Not surprisingly, in view of the company's large federal
business, the greatest concentration of employees is in the metropolitan
Washington, D.C. area, where roughly 6,000 are based. Overall corporate
headquarters are in El Segundo, California.
CSC delivers its client services through four business entities: the
Systems Group, Consulting Group, CSC Europe, and the Industry Services
Group. The Systems Group, serving the federal government, accounts for
61%.
Service Marketing/PricingService Marketing/PricingService Marketing/Pricing
PROFESSIONAL SERVICESPROFESSIONAL SERVICESPROFESSIONAL SERVICES
CSC is a better listener than a talker - this fact is partly a curse,
and partly a blessing. It is a very conservative company, and typically
does not invest heavily in marketing efforts, relying instead on long-
term relationships with its clients. With federal agencies such as NASA,
the relationship is more than twenty years old. Likewise, CSC has been
developing software for AT&T's Bell Labs since the 1960s. This approach
has been successful, as the company's revenue growth obviously attests.
CSC's current contract win rate is more than 50% in both the federal and
commercial arena. However, CSC lacks a strong presence in commercial
markets. The company has used strategic alliances (with AT&T, IBM,
Digital, SAP America and Equifax) and acquisitions (Index Group,
CSC/Partners, Cleveland Consulting Associates, CIG Intersys, Moria
Informatique and Butler Cox) to help it gain credibility in the
corporate world, it still needs to wave more banners and shake more
hands.
CSC prices its professional service contracts on a customized basis. No
specific price points for its services are available.
Perception/EvaluationPerception/EvaluationPerception/Evaluation
PROFESSIONAL SERVICESPROFESSIONAL SERVICESPROFESSIONAL SERVICES
CSC is the largest independent professional services vendor in the U.S.
The company has extensive expertise in the traditional lines of
professional services offerings; systems engineering and maintenance,
facilities management, network design, software development and systems
integration - particularly in large, complex contracts. CSC has been
integrating systems for the federal government for more than 20 years,
and it is the company's largest client, accounting for more than 60% of
total revenues through 1991.
Broad horizontal strength distinguishes CSC from much of its competition
which include such firms as EDS, Andersen Consulting, Martin Marietta,
Systemhouse, Boeing Computer Services and others. It should be noted
that CSC also competes with hardware vendors such as IBM, Digital, and
AT&T. However, owing to the nature of the business, CSC will team with
these vendors as needed, depending upon the contract requirements.
In addition to its historical software and information technology
strengths, CSC numbers among its professional workforce, engineers and
scientists with specialties ranging from meteorology to thermodynamics.
CSC offers satellite communications technology expertise and owns and
operates a satellite network.
Presently, CSC is attempting to leverage its traditional strength in the
federal arena into a larger share of the commercial markets. The
company's goal in the commercial sector is to be one of the industry's
top three professional service firms.
CSC's competition in the commercial market is primarily from other large
firms in the professional services industry. Big Six accounting firms,
principally, Andersen Consulting, are frequent competitors, as is EDS.
CSC feels its horizontal strength gives it an edge over the accounting
firms, and touts its technological strengths and R&D capabilities versus
other firms. Telephone companies often compete for the communications
and network design projects that CSC bids; here CSC counters with its
greater expertise in specific vertical markets. As previously mentioned,
CSC will also team with communications vendors, such as AT&T on various
projects. Due to the nature and size of its projects, CSC subcontracts
to, or partners with, over 300 information technology companies in a
given year. Other firms with whom CSC may work include: Sun
Microsystems, Digital, Apple Computer, SAP America, Oracle, Sybase, BDM
and Price Waterhouse.
As one of the largest companies in the professional services and
information technology business, CSC is well positioned for continued
growth. The company might achieve its goals faster if it invests more in
marketing and fine-tuning its corporate image, especially if it hopes to
compete - on a global scale - with the likes of EDS, Cap Gemini Sogeti
and Andersen Consulting - all of whom are strong marketeers.
CSC feels that systems integration will be at the center of the
information industry in the 1990s, and that concentration on core
competencies as well as intense cost management pressure will lead
companies to outsource their information technology and systems
integration needs, increasing opportunities for companies like CSC. The
company, which derived 27% of total revenues from systems operations in
fiscal 1991, feels that it is ready to respond to this need. The company
hopes to leverage its wide experience in the federal arena into a larger
commercial share. CSC intends to focus on the company's established
vertical markets - insurance, health care, wholesale/distribution, and
financial services.
At the same time, the rapid growth of CSC Index, the company's strategic
consulting practice - doubling in business volume since acquisition by
CSC two years ago - shows a demand for solutions that rise out of a
broad vision of business goals rather than a narrow technological focus.
As part of its emphasis on this business, CSC opened three new
commercial offices in 1991, expanding the company's systems consulting
and development practice into Dallas and opening new strategic
consulting offices in Chicago and San Francisco.
On the federal side, CSC believes continued opportunities for growth
exist, despite budget readjustments and cutbacks. CSC believes the
government as a whole will continue to look to private industry for the
technologies and services essential to its operation. The company is
also encouraged by recent changes in Department of Defense contract
criteria that stress quality over cost in bids on complex systems, and
are aimed at discouraging submission of proposals with unrealistically
low labor rates in order to win a contract.
Back in the early eighties CSC knew what it had to do if it was to
become a leading provider of global information technology services in
the 1990s. It has reshaped its business to more adroitly and coherently
respond to the rapid changes in technology and corporate and government
customers around the world. CSC is making great progress in achieving
its corporate vision through the year 2000.