InformationWeek

November 16, 1998

CSC Chief Emphasizes Flexibility

Analyzing The Integrators

Methodology

Fortune One's Outsourcing Challenge

For Some, Small Vendors Are Better

Merger Mania Vs. Merger Meltdown

Palmisano Extends IBM Relationships

Sprinkle Delivers For Deloitte

For Aris, Boutique Is Bountiful

Vendors Plan For Post-2000 Work

Behind The Numbers: Sizing Up The Integrators

Research Charts

Computer Sciences Corp. has cruised into the mainstream of corporate systems integration and outsourcing with an approach that stresses flexibility rather than strong-arm tactics. The caretaker of that approach is Van Honeycutt, who in his three years as CEO has taken CSC from a $3.4 billion company focused on government contracts to a $6.6 billion company that derives three-quarters of its revenue from commercial accounts.

Honeycutt himself doesn't seek the spotlight. But for those who mistake that low profile for timidness, just ask Computer Associates, whose $9 billion hostile takeover bid for CSC was beaten back this year by a mix of legal and public relations tactics that ranged from aggressive to borderline ruthless.

"CA thought going in that CSC was run by low-key wimps because the company doesn't have an overly aggressive style," says Stephen McClellan, a Merrill Lynch analyst who has tracked CSC for years. "The reality is that CSC does a spectacular job of winning its wars."

Indeed, CSC's willingness to adapt to customer needs has helped the company land big commercial accounts such as AT&T, DuPont, and J.P. Morgan. CSC has worked with General Dynamics since 1991, when the diversified, acquisition-oriented electronics maker outsourced its IT operations to CSC. Under the contract General Dynamics recently renegotiated with its outsourcer, CSC has exclusive rights to the IT operations of any company that General Dynamics buys--but only so long as CSC can maintain or beat preacquisition IT service levels and costs. "A lot of outsourcers are a lot more rigid," says General Dynamics CIO Ken Hill. "In many cases, an outsourcer would've only signed a contract to cover the entire company."

Honeycutt says word-of-mouth referrals and the "friendly reputation" of CSC have helped the company make the transition into commercial systems integration, out- sourcing, and consulting. Another CSC strength is its experience patching together the IT infrastructures of merged customers. Many of CSC's key project managers come from General Dynamics--and thus bring with them merger experience. CSC has also built a commercial following in vertical markets such as health care, financial services, chemicals, and oil.

Honeycutt has lived through CSC's evolution from government contractor to commercial services provider. He joined the company in 1975 as a regional marketing manager, advancing in 1983 to president of CSC's Credit Services Group, where he quadrupled the unit's revenue in four years. Honeycutt was promoted in 1987 to corporate VP and president of CSC's Industry Services Group, where he oversaw a wide range of commercial market activities. Honeycutt was named president and chief operating officer in 1993, and he succeeded Bill Hoover as CEO in 1995.

In contrast to Hoover--a personable, engaging manager--Honeycutt is more remote, says a former colleague who requested anonymity. "He's the kind of guy who will look right through you if you see him in the hallway," the source says. "But with customers, he is very attentive. Honeycutt is a dealmaker. His gift is in closing large deals with clients."

--Marianne Kolbasuk McGee