|
CSC Celebrates 45 Years  | | Roy Nutt | It takes gumption to name a company “Computer Sciences Corporation” when only 4,000 computers exist in the world. But in 1959, Fletcher Jones and Roy Nutt could foresee the opportunities that computers eventually would offer, and CSC’s founders chose to exploit the emerging market.
While regarded as a conservative company, CSC is successful today because of a series of critical—and sometimes risky—choices made by CSC’s early leaders. By pursuing key opportunities, expanding into new markets, acquiring specialized companies and attracting top-notch technical employees, CSC has grown from a fledgling two-man operation into a $13.8 billion corporation with more than 90,000 employees across the world.
Pursuing business, attracting talent
 | | Fletcher Jones | From its inception, CSC flourished under the leadership of men insightful regarding emerging business and technology advancements and unafraid to take chances. Nutt and Jones took a risk by quitting their jobs in 1959 to start a new company in Los Angeles, possessing only a small contract with Honeywell to develop a business-language compiler called FACT. In its early years, CSC worked for computer manufacturers developing systems software, and the company’s leaders aggressively pursued new business.
Their spirit was demonstrated by the way Jones captured the Univac 1107 operating system contract in 1963, a contract that established CSC as a serious competitor. As related by Roy Nutt in a 1984 edition of CSC’s employee newsletter, CSC News, “Negotiations between the two companies had been dragging on for 13 weeks—with virtually zero progress. Finally, Fletcher learned from an airline source that the president of Univac was going to be on a specific flight between Los Angeles and New York. He made arrangements to get the seat next to him and described CSC’s abilities throughout the flight. A day later, the young CSC team had a one-page contract stating that Univac would deliver to Los Angeles its first production model of the machine for the development of a full set of software. The Univac president had been dazzled by Fletcher’s performance. Upon arrival in New York, the story goes, he asked Fletcher if he could drop him off somewhere, and Fletcher boldly replied, ‘No, thank you. I’m going back to Los Angeles. The only reason I made this trip was to have those four hours in the plane with you!’”
The 1107 software package was successful, and CSC gained widespread recognition in the industry. CSC’s reputation for technical excellence and a stimulating environment enabled it to attract the brightest engineers and scientists in the country. One such person was Bill Hoover, who had been chief of computer operations at NASA’s Jet Propulsion Laboratory prior to joining CSC in 1964, and who would become CSC’s chairman and chief executive officer in 1972.
A shift in focus to users and government In the 1960s, Nutt, Jones and Hoover made a series of decisions that launched CSC’s rapid growth and changed the company’s direction. Instead of expanding CSC’s markets with the manufacturing of computers, the three executives decided to service users, who were beginning to develop their own system software and were relying less on companies like CSC. CSC began to focus on the U.S. federal government, the largest user of computers in the country.
In 1965, CSC acquired two divisions of International Telephone and Telegraph (ITT) to add communications expertise to CSC’s software skills, which was necessary to compete for U.S. government contracts at the time. That acquisition and the idea to pursue U.S. federal business returned handsome results. In 1966, CSC won a critical contract to run computer operations at NASA’s Marshall Space Flight Center in Huntsville, Alabama, unseating the incumbent contractor. In addition to establishing CSC as a leading competitor for government business, the Marshall contract provided the small but aggressively growing company with a pool of new talent.
“I joined CSC in Huntsville in the middle of the Apollo program,” said Tom Williams, who joined CSC in 1970 and ultimately became president of CSC’s Technology Management Group. “Those were very heady and exciting times, working on the space program and putting a man on the moon.”
In the following years, CSC would go on to expand its relationship with NASA, supporting Goddard Space Flight Center, Ames Research Center, Langley Research Center, Wallops Flight Facility, Dryden Flight Research Center, Stennis Space Center, Kennedy Space Center and Johnson Space Center.
Timesharing provides new opportunities
The confidence gained from early contracts propelled CSC’s leaders to take a risk in the early 1970s, investing time and money in a proprietary timesharing system. The system, called Infonet, would allow hundreds of remote users to run their jobs on the same computer. For the first time, CSC invested up-front money to build the technology and install the computers—all before seeing any revenue.
In 1972, CSC was selected from among 50 other bidders for a U.S. General Services Administration contract, which made Infonet the timesharing network for the U.S. federal government. By 1980, Infonet represented 27 percent of CSC’s revenue and 50 percent of CSC’s profit.
A series of acquisitions fuels growth
Later that decade and into the 1980s, CSC began to exploit new commercial markets. CSC started an aggressive acquisition program to supplement its federal expertise. In 1979, CSC acquired PAID Prescriptions, which provided a computerized system to handle prescription drug claims. The following year, CSC acquired TACS, which launched CSC into the income-tax-return processing business. The decade also saw CSC acquire Index and Computer Partners, establishing CSC in the commercial systems integration and management consulting market at a time when that market was poised for growth. During the same period, CSC acquired 17 credit services companies, resulting in CSC’s Associated Credit Services division, which continues to provide handsome revenues and margins today.
The acquisition of commercial companies would prove to be an efficient way of gaining talented employees and assets, but the practice also presented a challenge for CSC to incorporate acquired employees into CSC.
“CSC has grown through mergers or acquisitions from the beginning. With an acquisition, we get new ideas, new talent, different perspectives and seasoned IT professionals who have a lot to offer the company,” says Rolfe Schroeder, who joined CSC in 1979 and today is vice president of human resources for Technology Management Group. “Our focus has always been on helping people understand what CSC is and letting them know that we will welcome them as equals, recognizing their talent and experience.”
Outsourcing stimulates growth
In the early 1990s, CSC again saw an emerging opportunity and pursued it tirelessly, exploiting CSC’s government expertise and applying it to the commercial world.
“We’ve always been a very flexible and opportunistic company,” says Schroeder. “It was clear that something was going to happen with outsourcing. There had been nibbles at it in the 1970s with facilities management contracts, and outsourcing would be the evolution of that process.”
CSC’s landmark agreement with General Dynamics (GD) in 1991 would pave the way for future multibillion-dollar outsourcing deals. Although the concept of commercial outsourcing was still new in the early nineties, CSC’s entry into the market was not a lucky guess.
“We did not drift into the outsourcing market. We studied it for over two years,” says Van Honeycutt, CSC’s chairman and chief executive officer, who led the GD pursuit. He notes that GD was targeted because of CSC’s knowledge of GD and CSC’s intimate knowledge of government contracting.
Says Honeycutt, “We made a list of companies we were going to go after, one of which was General Dynamics. So we tried it and it worked, and then we invested heavily in it.”
CSC would go on to sign additional outsourcing contracts with British Aerospace (now BAE Systems) and British Home Stores in Europe and Australian Mutual Provident Society in Australia. CSC’s global presence continued to grow with acquisitions in France and Germany as well.
“We are much more global than we used to be, and we have to be global because our customers demand it,” says George Bell, president of CSC’s European Group. “It has been a necessary response to the fact that our customer base itself is increasingly global. In addition, expanding our global capabilities has helped CSC pursue new customers.”
The late 1990s illustrated that, sometimes, deciding not to pursue new business can be a good decision. With the advent of dot-coms and e-commerce, many believed that CSC would have to enter the “new economy” or perish.
“We met with incredible disagreement from a lot of our employees, to the point of them saying that we did not understand the ‘new economy,’” Honeycutt recalls.
Instead, CSC focused its energy on strengthening its core business offerings and on realigning its internal operations. CSC introduced a new operating model, eventually called “One CSC,” that encouraged divisions to work together, sharing resources for the ultimate benefit of the client—and the shareholder.
A renewed focus on federal work
During CSC’s early years, work with the U.S. federal government constituted the majority of CSC’s business. As CSC branched into the commercial world in the 1980s and 1990s, CSC achieved more of a balance between commercial and federal clients. In the early 2000s, CSC increased its efforts on U.S. federal opportunities, even while signing large, multibillion dollar outsourcing deals with European government agencies and commercial companies.
With the March 2003 acquisition of DynCorp, a Virginia-based IT and government services company, CSC was positioned to respond to the growing needs of U.S. civil and defense agencies and the newly formed Department of Homeland Security. Once again, CSC acquired a company that met the specific needs of CSC’s current and potential clients. And once again, CSC demonstrated that it was possible to integrate a diverse mix of new employees into CSC to support new and existing clients.
“Acquisitions and outsourcing contracts have provided CSC with a rich source of talented employees, and many have moved on to help manage the company and win future business,” Honeycutt says. “CSC will continue to grow, to evolve with our industry, and to support our customers as their business and technology needs change.” Related Information: Contact Us and Let Our Experience Help You Produce Results.
|
|
