Conference 7.286::digital

    What a deal-CSC buys DC.Digital gets a large lump of money and then CSC
    sacks/changes terms of all the acquired employees.I'm sure that Bob has
    fully taken this into account in the negotiations and is completely
    sure that some silly local law or community law or union won't get in
    the way at the last minute.
    I am also sure that CSC have taken this into account and this is why
    the negotiations will either take ages(great for engaging clients..) or
    be over quickly and probably be unworkable.
    

Subject:        U.S. Shares Higher in Europe, Led by Computers, Autos O-DJI -Sentinel
DOW Story
Source:         DowVision-Dow International-DI
Size:   1388
Sentinel Delivered by Groupware Advanced Development:   
DIGITAL INTERNAL USE ONLY BY INFORMATION PROVIDER AGREEMENT:    

  LONDON (AP-DJ)--U.S. shares were higher at midday in Europe Thursday, led
by computer and auto stocks. 
  Traders said they were surprised by the strength of interest in the
market given the general uncertainty caused by Thursday's Bundesbank
council meeting, the upcoming G-7 summit and Friday's key U.S. non-farm
payroll data. 
  One dealer said the Dow Jones Industrial Average could open as much as 20
points higher if the trends seen in London are sustained. 
  'It could be one of the best openings for some time,' he said, adding:
'We were surprised to see that people are prepared to pay what appear to
be premiums for stocks.' 
  Wednesday, the index closed up 22.02 points at 3,674.5. 
  Among computer stocks, Digital Equipment is ahead 3/8 to 19 3/8. IBM is
up 3/8 at 57 3/8 and Hewlett Packard is 1/2 higher at 73. Texas
Instruments has advanced by 3/8 to 81 1/8. 
  Traders said Digital Equipment was supported by reports that it plans to
sell a second unit. 
  Chrysler, Ford and GM were also higher in morning trade. Chrysler has
climbed 3/8 to 46 3/4. Ford has added 1/4 to 29 1/8 and GM is 3/8 higher
at 50 a share. Traders said there wasn't an obvious catalyst for the
sector's advance. 
  Pepsi rose 1/2 to 30 5/8 after bullish comment on the stock in the Wall
Street Journal's Heard On the Street column, traders said. 
  (END) AP-DOW JONES NEWS 07-07-94
  1128GMT

    re: .1
    
    Why not give it a chance?  CSC has been in business for a long time and
    has a good reputation, as far as I can tell from what's been posted in
    here.  Maybe what you say is true -- but it seems to me that it's more
    likely they'll be doing their best to hold on to good people to avoid
    eroding the value of the assets they just bought. 
    
    --bonnie

Some data from Standard & Poor's on CSC:

	Summary:
	
	This leading particpant in the computer services industry derived about
51% of its fiscal 1992-1993 revenue from the U.S. government.   CSC provides a
full range of infor. technology services including business reengineering and
management consulting, systems development and integration and systems
operations and outsourcing.  Despite continued weakness in European operations,
as well as sluggish federal revenue growth, longer-term results should benefit
from the addition of new megacontracts and strong commercial revenue growth.

----

	Traded on NYSE;  symbol CSC;  In S&P 500;  no dividend.

	Stock price on 4/14/94 was 36.875 with P.E. of 22;

	S&P ranking B+;   FY ended in March;  

	Revenues:   93: 2.4 billion;  92: 2.1 billion;   91: 1.7 billion
		    estimated 94: 2.6 billion

	Costs wre well controlled;  net income 1.14 per share


	Mar 94: Signed a ten year agreement with British Aerospace to be
strategic partner in providing info tech services.  Expected revenues = 1.3
billion.  In Dec. 93, CSC acquired ARC Prof Services, a systems engieneering
firm for $64 million

	Stock price has risen from 7.5 in 1984 to 36 in Q1 94.

	They had 155 million cash at year end 1993;  Total assets 1.4 billion
	with long term debt of 295 million 

	Systems Group accounted for 51% of revenue;  Consulting 20%; and
	Industry Services 29%

	U.S. government provided 51% of 93 revenue, commercial 38% and 
	international 9%.

	CSC Industry group includes healthcare, insurance, and financial
	services.  

	The TEchnology Mgmt Division manages the company's 1- year, 3 billion
outsourcing contract with General Dynamics.

	Institutions hold 84% of stock;  50 million shares;

	26,000 employees

    re .2
    
    How does one get those Dow Jones reports via Easynet ?
    
    Thanks,
    
    Klaus
    

    I wonder what might attract CSC to DC. DC people have generally a very
    broad and good understanding of the computer industry and are very well
    trained compared to software houses. But the majority of the knowledge
    of these people is on Digital products (hardware and software). What
    use would that be to CSC?
    
    In my opinion, DC is dead (in or outside SCS) without Digital software
    products
    
    Cheers,
    Henny

    re: .6
    
    If you were CSC and wanted to expand your customer base outside of the
    U.S. federal government and the IBM base, you might look at the customer
    base of the 2nd or 3rd largest computer co. in the world. If Digital
    wants to sell its consulting arm, wouldn't that be the perfect way to
    quickly expand your customer base? Also, if you didn't have much of a
    presence outside of the U.S., wouldn't you be interested in an
    organization that was well established worldwide? I think there are a
    lot of reasons CSC would be interested in DC. And no one says that
    after a year or two the DC people would still have the majority of
    their knowledge on only Digital products....
    
    
    Just my .02.
    
    Debbie
    

	The question I have is, how will a company with just $155 million in
	cash acquire something that has been rumored to be for sale in the
	$1-2 billion range? Digital is interested in getting cash right now,
	not stock or non-liquid assets. CSC would have to do some fancy
	financing to take on an entity about half its size (revenue-wise)
	and 10x its cash reserves.

	Roy

    re: .6
    
    FWIW, my knowledge of Digital products is certainly larger than my
    knowledge of most non-Digital products, but my knowledge of designing
    and implementing software systems outweighs them both!
    
    Perhaps this is the key to the negotiations -- not the knowledge to
    use Digital products, but the knowlege to use available tools to solve
    problems.  That knowledge is easily transferable to another
    corporation.
    
    -- Russ

    Here is the document mentioned by Brigitte.  Caveat: although all
    reasonable care etc....
    
    
    
Computer Sciences Corporation (CSC)

1.	The Company

Computer Sciences Corporation (CSC) was founded in 1959.  It is one of the 
largest independent professional IT services companies in the US.  CSC Europe 
was established in 1967, but still only represents 9% of the total revenue of 
the company.  In 1992, the Services Management Division (SMD) was created 
within CSC Europe dedicated to the provision  of long term partnerships and 
outsourcing services.  It currently has a staff of 300 and operates from CSC 
locations in Belgium, France, the Netherlands, Germany and Poland.

CSC's objective is to become one of the top three companies in the commercial 
market for professional services, systems integration, and outsourcing in the 
USA and Europe.

2.	Organisational Structure

2.1	US Structure

In the US, CSC provides products and services through three operating groups, 
each with a number of divisions within it:

       - The Systems Group/Government Group.  Provides services on systems 
       integration, the development of custom-designed computer-based and 
       communications systems, operational support of clients' technical 
       activities, facilities management, and turnkey systems development.  
       This group mainly serves the US Government.  The Divisions within the 
       group are:

       	       - The integrated systems division
       	       - The systems sciences division
       	       - The network integration division
       	       - The systems engineering division
	       	- The applied technology division (CSC's largest business unit 
               with 9,000 staff and $500m in annual revenue).  This division 
               was elevated to group status in Dec. 1993.  This group will 
               handle all major commercial outsourcing contracts for CSC in 
               North America

       - The Consulting Group.  This is the counterpart for the systems group 
       in the commercial market-place.  Provides services on management 
       consulting, requirements analysis, systems design, software 
       development, systems engineering and integration, communication systems 
       engineering, and facilities management.  The divisions within the group 
       are:

       	       - CSC Index Inc.
       	       - CSC Partners Inc (formerly Computer Partners Inc.)
       	       - Cleveland Consulting Associates Inc.

       - The Industry Services Group.  This group provides outsourcing and 
       industry specific services including IT and administration, mainly in 
       insurance, healthcare and consumer finance.  The division within this 
       group are:

       	       - Health and administrative services division
       	       - CSC Logic  Inc.
       	       - CSC Healthcare Systems Inc.
       	       - Comcare
       	       - CSC Credit Services
       	       - CSC TACS Division

2.2    In Europe

Headquartered in the UK, CSC Europe has the following business units:

       - Belgian operations division
       - French operations division
       - German operations division
       - Netherlands operations division
       - UK operations division
       - Services management division (SMD) - responsible for outsourcing 
       throughout Europe, unlike the operations companies which have a country 
       focus and a brief restricted to SI and professional services.

3      Recent Acquisitions

- July 1986    Acquired Computer Partners, a professional services firm 
  serving manufacturing, distribution, finance, insurance, utilities, state 
  and local government.  Revenue $15m p.a.  Now known as CSC Partners.
- Oct 1988     Acquired Index Group, Inc., a leading consultancy in IT 
  management and strategy formulation.  Revenue $30m p.a.  Added strong senior 
  commercial consulting capability to CSC's systems integration offering.
- April 1989   Acquired Seako Inc.  Specialist in IBM-based software products 
  for medical groups, managed healthcare organisations and private practices.  
  Revenue $7m p.a.  Merged with CSC Comtec to form CSC Healthcare Systems, in 
  the US Industry Services Group.
- June 1989    Completed acquisition of CIG-Intersys Group the largest 
  information services company in Belgium.  Revenue $85m p.a. 1,000 employees.
-Nov 1989      Acquired remaining 19% interest in Inforem Ltd, a British 
  consulting firm with clients in the financial services, retail and leisure 
  industries.  Revenue $20m p.a.  Merged into CSC's European operation.
-Nov 1989      Acquired LPS Inc., specialists in systems development for 
  commercial clients.  Revenues $9m p.a.
-Nov 1989      Acquired Cleveland Consulting Associates Inc., providing 
  logistics and operations management and consulting services world-wide.  
  Revenue $13m p.a.
-Feb 1990      Acquired Logic Inc., a provider of system operations, 
  processing and applications software to insurance companies and financial 
  institutions.  Revenue $17m p.a.
-Jan 1991      Acquired Analytics Inc., specialist in information security and 
  communication systems.  Revenue $28m p.a.
-Jan 1991      Acquired Moria Informatique, a Paris based systems integration 
  and software firm.  Revenue $38m p.a.
-Jan 1991      Acquired Paragon Consulting Group, specialists in operations 
  management consulting services to food and consumer products manufacturers.  
  Revenue $1.5m in 1990.
-May 1991      Acquired Butler Cox, a London based IT management consultancy.  
  Revenues $18m p.a.  Merged into CSC Index.
-July 1991     Acquired CompuSource.  Revenues $20m p.a. Provides system 
  operations and processing services to over 300 clients.
-Oct 1991      Completed the acquisition of Intelicom Solutions Corp.  
  Revenues $30m p.a., a major provider of software to the telecommunications 
  industry in the USA.
-CSC is rumoured to be negotiating the purchase of ARC professional Services 
  Group.  No further details.  (Computer Resellers News 6/12/93)

4	Revenues

4.1	CSC World-wide Revenues FYE 31/3/1993 (From INPUT, source CSC)

Revenues		$2,479.8m
Annual Growth Rate		17%

Profit after tax	   $78.1m
Annual growth rate		15%

Earnings per share	    $4.66
Annual growth rate		13%

4.2	CSC 1992/3 World-wide Sources of Revenue by Line of Business

Line of Business		Share			Revenue
---------------------------------------------------------------
Consulting including
business re-engineering		37%			  $901m

Systems integration		25%			  $617m

Outsourcing			38%			  $962m

TOTAL				100%			$2,480m

4.3	CSC 1992/3 World-wide Sources of Revenue by Market

Market				Share			Revenue
---------------------------------------------------------------
Department of Defence		27%			  $676m
NASA				11%			  $261m
Civil Agencies			13%			  $318m
Total Federal			51%			$1,255m

Commercial USA			40%			  $990m
Commercial International	 9%			  $235m
Total Commercial		49%			$1,225m

GRAND TOTAL			100%			$2,450m

4.4	CSC 1990 European Revenue by Country

Country				Share			Revenue
---------------------------------------------------------------
Belgium				 54%			$108m
UK				 29%			 $58m
Germany				 10%			 $20m
Netherlands			  7%			 $14m

TOTAL				100%			$200m

4.5	CSC 1990 Revenue by Delivery Mode

Delivery Mode			Share			Revenue
---------------------------------------------------------------
Professional Services		47%			 $93m
Systems operations		19%			 $38m
Turnkey Systems			15%			 $30m
Processing Services		12%			 $25m
Systems Integration		 5%			 $10m
Software Products		 2%			  $2m

TOTAL				100%			$200m

4.6	UK Revenue Accounts of CSC Computer Sciences Ltd to 03/92

	- Sales Turnover			#34.943m
	- Profit before tax			 #0.354m
	- Net tangible assets			 #4.664m
	- Share funds				 #4.620m
	- Profit Margin				   1.01%
	- Return on share funds			   7.66%
	- Return on capital employed		   7.58%
	- Liquidity gearing ratio		   5.24%
	- Number of employees			     463
	- Share funds per employee		  #9,978
	- Working capital per employee		  #7,922
	- Total assets per employee		 #29,769
	- Turnover per employee			 #75,471
	- Profit per employee			    #765
	- Salaries as % turnover		  46.21%
	- Average remuneration/year		 #34,875

4.7	Revenues 1993

CSC UK operations end of year revenues for FY 1993 were #59m (Outsourcing 
Today)

5	Salaries and Incentives

No information available

6	Products and Services

6.1	Services Provided

CSC Europe provides the following services:
	- Consulting
	- Software development
	- Systems integration
       - Outsourcing.  Outsourcing has been a major growth area for CSC.  
       World-wide revenue from FY 1992 was $824m (39% of total) and expected 
       to reach $1bn by the end of 1993.  Revenues from this business in 
       Europe are believed to be $80m (INPUT) and are expected to reach $1bn 
       by 1997.  In April 1992, the Services Management Division was set up in 
       Europe, dedicated to the provision of long-term partnership and 
       outsourcing services.  It currently has 300 staff, and operates from 
       locations in Belgium, France, the Netherlands, Germany and Poland
       - Process engineering and process management

7	Customers

CSC reported that they won 45% of all the contracts they bid for during 1993 
and that the total value of contracts was $1.1bn.  This bid ratio is down on 
previous years reflecting increased competition.

*      British Home Stores (UK).  11 year agreement to run the company's data 
       centre and develop and maintain applications.  Worth $200m. This is one 
       of the longest outsourcing deals ever signed in the UK (case study in 
       Outsourcing Today Vol. 1 Issue 1 Jan 1993)
*      British Aerospace.  Worth $1.5bn over 10 years.  Outsourcing contract 
       involving 1250 staff.  Beat EDS for the contract, despite EDS's 
       superior technical knowledge.
*      Royal Air Force.  Worth $23m over 2 years, to define the requirements 
       for a modern logistics system
*      General Dynamics (US).  The worlds largest outsourcing contract, signed 
       Nov. 1991.  Valued at $3bn over 10 years.  This contract added 
       approximately 2,600 people and three major data centres to the CSC 
       organisation
*      Bradford and Bingley Building Society.  Outsourcing contract.
*      Texas Homecare
*      Gateway Supermarkets
*      CSC expanded its 23 year partnership with AT&T in fiscal 1991 with a 
       broad spectrum of new services.  In the area of high level consulting, 
       the company is helping AT&T re-engineer the methods used to fill 
       service orders for clients to improve quality, speed, and service, and 
       reduce costs.

8	Strategies

8.1	Corporate Mission

CSC's positioning is summed in the 1992/3 Annual Report:

    	"Being best at business re-engineering is a prerequisite to helping 
    companies address the issue of competitiveness in a rapidly changing 
    environment.  Pre-eminence in the evaluation and application of technology 
    is essential to leadership in systems integration and information 
    processing outsourcing.  Having the best project management skills is 
    critical to success in the development and operation of complex 
    information systems.  So, all three are required if we are to be the best 
    at helping clients get break-through results in the way they operate."

The driving process behind these goals is business engineering.

8.2	Revenue Goals

CSC has a goal of having a $3bn commercial business in 1997, with $1bn of this 
coming from Europe.  If the company's outsourcing activities maintain their 
share of revenues, then this implies a European outsourcing target of $400m 
for FY 1997.  CSC intends to achieve this growth by:

       - Moving up the value chain, and relating outsourcing to the client's 
       business effectiveness and efficiency
       - Viewing outsourcing as a global business.  At present, CSC's major 
       European data centre is located in Brussels.  CSC also provides 
       outsourcing services from sites located in Merseyside and Luton.  There 
       are now plans to establish further data centres in Germany and France.
       -Developing partnerships with large organisations.  This is critical to 
       the development of its transnational outsourcing business.  The major 
       industry sectors targeted by CSC in Europe are:

       		- Government
       		- Banking
       		- Retail
       		- Defence
       		- Air traffic control
       		- Transportation
       		- Manufacturing

In the 1980's CSC's European growth did not match the market.  However its 
present marketing strategy, based on the Index Group's strategic consulting 
programmes and business re-engineering - reinforced by the acquisition of 
Butler Cox - seems to be proving more successful.  However using acquisitions 
in Europe to attain revenue growth, has not realised the revenue, profit and 
growth it anticipated.  It is unclear how long it will take for CSC's European 
organisation to be a net profitable growing venture.  (Gartner)

8.3	UK Opportunities

In the UK, CSC sees opportunities for outsourcing created by the style of the 
British Government and its enthusiasm for devolving functions from central 
administration to external contractors.

9	Alliances

CSC has alliances with Borland International, Digital Equipment Corp., Hewlett 
Packard Co., and Sun Microsystems.  CSC will develop other alliances as 
appropriate.

10	SWOT Analysis

Strengths

*      CSC has been successful, primarily in the US in its federal systems and 
       services, and its professional services business.
*      It has a strong base of long term contracts, generally with a total 
       value in excess of $100m
*      Rapid success in the commercial professional services market.  It had 
       not played a major role prior to 1987, when it announced a goal of 
       attaining 50% of its profits from commercial business by 1992.  Success 
       due in part to its success in Federal systems integration, and part by 
       acquisition.

Weaknesses

*      US Bias
*      Low revenues from International sales
*      Lack of commercial marketing experience (INPUT)

Opportunities

*      To map its US success onto the European market
*      To bid for Government contracts in Europe

Threats

*      Likely to be constrained from reaching the highest levels of the 
       systems integration market by its strong focus on IT oriented services 
       and a lack of willingness to embrace the wider business issues of its 
       clients
*      Still plagued with losses due to acquisitions in Europe

11     News Items

Contracts Won

*      CSC has signed a 10 year $26.7m contract with United Illuminating 
       Company, a US utility company (Outsourcing Today, Vol. 1 Issue 2 Sep 
       1993)
*      Computer Sciences will purchase British Aerospace's internal 
       information technology systems for approximately $112m.  In return, 
       Computer Sciences will provide British Aerospace with services for 10 
       years, at a cost of about $134m per year.  Computer Sciences said that 
       the agreement was made orally, and that both parties expect to sign a 
       detailed agreement early in 1994 (The Wall Street Journal 17/11/94 pB4)  
       CSC beat EDS Scicon in attaining the contract.  under the contract 
       which will take effect on 1st March, CSC will  take on 1,250 of BAe's 
       systems staff (Computing 18/11/93)
*      Computer Sciences won a $90m, five year outsourcing contract from RAET.  
       The Netherlands information technology service company will turn over 
       its data centre responsibilities and 102 employees to Computer Sciences 
       as part of the deal.

12	Company Address, CEO's and Number of Employees

World-wide

World-wide Headquarters	Computer Sciences Corporation
			2100 East Grand Avenue
			El Segundo
			California 90245
			USA

			Tel 0101 213 615 0311

Chairman and CEO - William R Hoover
World-wide employees - 27,000

Europe

European headquarters	CSC Europe
			279 Farnborough Rd
			Farnborough
			Hants GU14 7LS

			Tel 0252 363000
			Fax 0252 370222

European CEO - Ron W Mackintosh
Marketing Director - Chris Rogal
European employees - 1,800

UK

UK Headquarters		CSC Europe
			279 Farnborough Rd
			Farnborough
			Hants GU14 7LS

			Tel 0252 363000
			Fax 0252 370222

UK Employees - 400

13	Bibliography

- INPUT CSC Company Profile Dec 1993
- Computer Users Year-book 1992/1993.  Facilities management and network 
  management entry
- Computer Users Year-book 1993. Consultants company profiles entry
- Gartner Group 'Computer Sciences Corp's Commercial Services Strategy' 
  Research Note May 1993
- Outsourcing Today Vol. 1 Issue 1 June 1993
- Outsourcing Today Vol. 1 Issue 2 Sept. 1993
- Services Competitive Newsletter Oct and Nov. 1993 (Digital GIA NWSS)
- Competitive News - Services UK Nov 92-Nov 93 Digital Sales operations)
- INPUT Information Systems Outsourcing Competitive Analysis. Europe 1992, 
  Feb. 1993
- Dataquest. European Professional Service Trends.  The Wider Economics of IT 
  Outsourcing May 24 1993

--------------------------------------------------------------------

    re .5: I use Mosaic to acces the 'Maynard Times'. (there are probably
    other wyas). Try
    
    http://www-ad.mso.dec.com/maynardtimes/mt-toc-newfirst.html
    

    
     CSC has always been great at filling needs,
     CSC has always been great at growing existing business,
     CSC has always been great at maintaining existing accounts,
    
     I say these things as direct comparisions to Digital in terms of
    DC people. I say this in a myopic view of exisiting accounts where
    we are in body dollar wars. Our cost per person is high, and our
    added value is difficult to sell. Once sold, though, we can really
    shine.
    
     So this CSC aquisition might work out both ways, the only things
    I would be concerned with, are:
    
     Lack of my people network...
     Lack of EasyNet....
     Lack of Hardware resources...
     Lack of internal software use...
     Lack of Notes conferences....
     Lack of CSC/Internal hardware/software support...
    
    CSC and digital should iron these things into an agreement, to cut
    me off from digital would be to seriously impact my added value.
    But I would make up for it by my superiour personality. '^)
    
    Oh, BTW, I use to work for CSC, 5+ years, do I get my seniority back?
    
    -Mike Z.
    Digital Consulting

    re .12:   ... Lack of EasyNet
    
    Think about it.  OMS (Operational Management Services) is part of DC.
    IS is part of OMS.  CSC could acquire IS and the Easynet as part of DC.
    Therefore we (DC) would still have access to the Easynet - it's the rest 
    of Digital that wouldn't (if you see what I mean).
    
    Presumably the rest of Digital would enter into a service contract with
    CSC to provide Easynet and associated services.
    
    Martin
    

    .10 makes interesting reading...
    
    Note 3151.22 says their revenues are $1,234m - .10 says $2,479.8m -
    who's right? (The smaller figure is apparently a bit older, but
    still...)
    
    Taking the larger of the two numbers (for the benefit of doubt) gives
    revenues/employee ~ $92,000 (27,000 employees) - I don't know how much
    DC makes, but isn't our total a bit higher?
    

    re: .13
    >>Think about it.  OMS (Operational Management Services) is part of DC.
    
    You are assuming OMS would be part of the DC sell-off.
    (For example; until recently CSS used to be part of DC)
    
    (purely hypothetical ramblings follow)
    
    perhaps CSC wants Asia-Pacific and Europe, but not USA
    perhaps CSC wants 'Practice' (aka 'Affinity Group' folk) from USA
    perhaps some DC folks would get shifted to MVCS and/or sales support,
    	and CSC would only take the SI portion of DC
    perhaps DC Software Engineering isn't part of the deal
    perhaps all CSC wants _is_ the OMS part
    
    There are _lots_ of possibilities; 
    
    BTW, has the Gresham DVN been rescheduled yet?

    Last time I phone DEC US for a resource I was told that DC's fully
    loaded cost was 175K.
    
    Based on Information in .0 revenues of 1.5B and other notes given DC
    15,000 employees looks like we are loosing money.
    
    However our 100K per head revenue is better than CSC. Sounds like a
    problem with allocations.
    
    Regards from the Great white north
    doug

    
     re -.last couple
    
    What is DC then? I think we need to figure out what is what within
    DC. When I speak of DC I think of PSC's. The way some people think of
    DC it has its arms all over like an octopus.
    
    -Mike Z.
    

    Isn't their a Tom Gerritty (sp) on Digital's BOD?
    
    I believe he ran or found Index, which was acquired by CSC in 1988?
    
    Maybe there's a connection?
    
    
    Elliot Paull
    DC Program Manager

From Livewire (Digital at a Glance):

   Thomas P. Gerrity
   Dean, Wharton School of the University of Pennsylvania and
     director of several corporations

    re .13 and others
    
    Maybe OMS is the real prize ?
    
    CSC could 'purchase' all the OMS computing assets, including the net,
    then sell resource back to Digital subsidiaries (regardless of who
    eventually owns the subsids.) Oh, and as part of the deal, get CSC to
    slam in new systems fast (..just like EDS are doing for HP
    manufacturing...). Digital gets cash (for the assets), plus new
    internal systems in a hurry, plus a guaranteed lower unit cost for
    ongoing computing - the classic outsourcing benefits.
    
    As an aside, CSC gets a significant step up in Europe and Asia, plus
    ready access to the installed base globally.
    
    And don't worry about CSC getting hold of cash - at a push they could
    borrow against assured future earnings -again all in the nature of long
    term contracts.
    
    AW

   Thomas P. Gerrity
   Dean, Wharton School of the University of Pennsylvania and
     director of several corporations
>> Formerly CEO, Index Group, AKA Index Systems, purchased by CSC...

Re 3237.14,15,16,17 on Revenue per Employee, Brebach's DVN, and What's DC
===================


Re 3237.14,16 on Revenue per Employee 
------------- 
The info which puts CSC's revenue at ~$2.5 billion is corroborated by other
sources.  With 27k employees, that gives us ~$93k revenue per employee.

On the other hand, I have doubts about the accuracy of $1.5 billion revenue for
DC, as stated in 3237.0.  In FY93, Europe alone was almost $1 billion, and 50%
of DC worldwide.  And Dataquest estimated DC at $2.3 billion for FY93 (I think
it's too optimistic.)  This year, taking into growth (yes, there is some), we
should be close to $2 billion.   

So, let's count DC at $2 billion.  With the 12-15k employees that we have, that
puts DC at $133-167k per employee.

I thought that DC was low in comparison with the remainder of the industry. 
Now, it looks like CSC is much lower.  Should I be worried?  Well, if somebody
could get revenue-per-employee data for other comparable companies, then we'd
have a better fact base to discuss on, and we could serenely decide whether or
not we should panick.   ;-)


Re 3237.15 on Brebach's DVN
----------
It's currently scheduled for 28-Jul-94.


Re 3237.17 on What's in DC?
----------

DC is the PSC's, plus OMS Delivery Groups, plus Public Training Delivery people,
plus Management & Admin people in Territory HQ's, Area HQ's, and Corporate HQ.
This is the closest to an official definition as you could get.

But this doesn't mean that all of DC as defined above would be sold to CSC. 
Check with your usual information providers in the near(?) future.


Regards, Stephane.

    re .22
    
    So we have a higher revenue per DC body than CSC.  It looks like CSC
    are making money and we are not.  This would re-inforce my impression
    that revenue per body is essentially meaningless.
    
    So what's Gresh going to say? (Yes I have read the DVN announcement).
    
    What is coming out on the 18th?  Is this date, being mentioned from
    various sites in Europe, going to contain an announcement of content? 
    I note that this date is before the worldwide figures are published.
    
    Also, why does it take a month to add up a lot of figures?  I thought
    we had computers for that sort of thing.  Or does the 'interpretation'
    take time?
    
    Bated breath and all that.

    For some reason that I've never been able to understand, "revenue"
    seems to get counted several times in this company. I suspect that, if
    you added up all the group-level claims for "revenue", you'd end up
    with a figure much higher that the "revenue" for the company as a
    whole.
    
    So, when individual groups proclaim "revenue per employee", I'm
    immediately suspicious.
    
    ...tom

    Speaking of revenue per employee...
    Compaq, taking total revenue last quarter divided by their headcount,
    is $713,000/employee.  Digital would have to downsize by a factor of
    about 7 (i.e. down to about 13,000 employees), while keeping revenue
    the same, to match Compaq.  If Compaq's revenue growth remains steady,
    they will pass Digital to become the third largest U.S. computer maker
    sometime next year.  kb

    Cisco Systems (internetworking) has revenue at $500,000 per employee.
    But that was over a year ago when I visited them.  It could be higher
    or lower now.  --S

Careful careful when using Revenue per Employee...

If I buy $97 billions worth of materials, and I add in two bolts at �1 each, and
I sell the whole solution for $97 billions, then my Revenue is $97 billions, and
my hypothetical single-employee company has a Revenue per Employee of $97
billions...  (And I just made a loss of �2.)

I don't know Compaq's cost structure, but if for instance they outsource a large
proportion of their manufacturing, then their Revenue per Employee should
probably be much larger than Digital's or HP's.

So, what would be most interesting is a comparison between DC and competitors
having a comparable mix of activities, assets, suppliers, etc.  Does this even
exist?

Regards, Stephane.

    
    Revenue per employee was ingored for a long, long time.  Whereas it is
    not the be all and end all as was pointed out, it should figure in the
    formula when figuring out where a company should be.  The key is to
    look at more than one area at once.  I remember looking through digital
    financial during the period where things went south.  I cannot remember
    all of the particulars but there was one figure in liability column of
    the financials that took an extreme turn one year.  I documented that
    and sent it to the powers that be, but I never received any kind of
    response to the memo.
    
    
    Mike

    I think Profit/Employee is the most accurate figure for comparison.
    
    Why is so much of Digital stuck on the word revnue and thus avoid the
    word profit?
    
    Just curious?
    
    rww

I think the reason use the term revenue per employee is that is an 
accepted measure of productivity. It is not a profit/loss/asset/liability 
measure, there are lots of those around. In order to compare ourselves in 
terms of productivity and output per person revenue per person is very 
important. However to be meaningful this must be done at the company level
and with companies in the same industry group and style of business. Looking
at DC's revenue per employee is pretty meaningless since there are thousands 
(literally) of employees not on the DC headcount that contribute to its
success (like the sales force for example!). 

    It's all a shell game.  Fire all the permanent employees, replace
    them an equal number (or more!) of contractors doing the same work,
    and Bingo! the revenue per employee skyrockets because the
    contractors aren't part of the Official Headcount.  Never mind that
    the contractors may COST just as much as the full-time employees did,
    and the bottom line PROFIT may not be any better...the revenue per
    Official Employee is up, so we must be doing better.  

    The following reply has been contributed by a member of our community
    who wishes to remain anonymous.  If you wish to contact the author by
    mail, please send your message to ROWLET::AINSLEY, specifying the
    conference name and note number. Your message will be forwarded with
    your name attached  unless you request otherwise.

    Bob - Co-moderator DIGITAL

    Re .31, I wonder how we compare with other companies on revenue per VP?
    Now that would be an interesting metric, especially since it's
    management, not ICs, who have the greatest impact (per capita) on
    revenue.

    On the other hand, who'd be willing to bet on whether any steps would
    be taken to improve that metric, should it turn out to be significantly
    worse than our competitors?

    Or, perhaps, we were already extremely high on this one, indicating a
    need to greatly increase the number of VPs and/or decrease revenue
    (both of which steps which been taken), to bring us in line with the
    competition.

    Yes, that's it. We were too high on this one.

    The last three paragraphs were sarcasm, folks. The first was an honest
    question.

    
    Regarding the emphasis on revenue - simple mathematics at work!
    
    There is an old business school formula, "Revenue - Expense = Profit'.
    It is one of many - "Production - Sales = Scrap, etc. etc.".  
    
    Digital's MINOR emphasis on revenue (per employee, by business unit,
    etc.) is an attempt to work one of the aspects - the MAJOR emphasis 
    continues to be on expense, as all of us that keep looking over our
    shoulder are well aware.  Digital needs to work both aspects - although
    this is not new news, declining revenue per unit of functionality and
    increased competition in the service space has put TREMENDOUS pressure 
    on sales and services to maintain the revenue stream.  
    
    I am neither sage nor prophet, but I predict that neither of these
    situations will change soon.
    
    
    
    
    
      
    
    

HP revenue per VP is over $1.4B (yes, thats a B!)

At that rate, we would be a $200B company!

Bob

    I heard a rumor that the talks with CSC had broken down.  Anyone else
    hear the same thing?
    
    Steve

    Oh please, let it be so.....
    
    Alan
    
    [who would like to STAY here and still enjoys his work]
    

    re: .36  ... talks with DC and CSC breaking down ...
    
    I personally think it might be better for the rank and file technical
    people if DC got bought out by CSC. It will *certainly* be better for
    those project managers who have been successful, despite all of the
    internal roadblocks that have been thrown in the way. Here's why:
    
    Certain top DC managers might receive golden parachutes and meaningless
    positions outside the chain of command. Expensive, but harmless.
    
    Many middle-managers and staffers add no value, deliver no consulting, 
    and win no business; these people will be terminated. CSC, like most
    other big consulting firms, has no place for "administrators", yes-men,
    or any other type of expensive deadwood. 
    
    If your'e good at winning new contracts and squeezing big money out
    of clients, then you have the potential to become partner. These are
    sometimes known as "rainmakers" in the trade, and are highly prized.
    
    If you are good at managing profitable projects, then you have the
    potential to become director. These are the breadwinners of the
    consulting business, and they speak with the voices of gods.
    
    If you are good at DECspeak, fudging "numbers", and sending memos, 
    you have the potential to be unemployed.
    
    In which of these categories do many current DC personnel fit?
    
    To be fair, for years Digital has misguidedly rewarded managers who
    took no chances, and always made sure that the bosses heard what they
    wanted to hear. There was never the least incentive to learn any true
    "business" skills, and many of our most successful project managers
    just got disgusted with the b.s. and left. The ones left in DC are
    here because they followed "The Rules", never mind that the rules
    they followed were detrimental to the company and the balance sheet.
    This would change quickly at CSC.
    
    Geoff

    
    GEOFF,

    	on the spot, CSC suceedes in very tough and difficult field,
    outsourcing, they must be professionals. They have my respect.


    				w

    .38 is dead right on the ringer. one other thing of note. if CSC
    gobbles up DC they probably will neogiate a deal that doesn't require
    them to adhere to a Digital sponsored severance program. there could be
    one helluva lot of middle management on the streets with "packages"
    that amount to what is required by law. then again,...

    Uh, .38 might be on the money, maybe not.
    
    But the nodename looks Asian.  So's .39's.  I still see no evidence
    that DC ever intended to take more than a token number of US
    contributors.  They probably want DC outside of the US.  Plus a big
    contract to outsource Digital's operations, which Digital feels a tad
    uncomfortable about.
    
    Given the ambiguity of Palmer's latest "20,000 cuts", this could have
    various implications.

    re: .41 and the US vs. non-US thing ...
    
    Yeah, right now I'm in Asia, next month, who knows ...
    
    All things are relative. While the primary enticements to CSC may be
    the Asia and European DC organizations, CSC can't ignore the existing
    pool of talents and business opportunities that would come with the
    US DC operation. My guess is that CSC would take a hard look at the
    technical people in the US organization before cutting them, as well
    as a few program managers who have reputations above and beyond the
    normal Digital audience. I hear that CSC already knows who those 
    people are, and plans are being made to ensure that they are retained. 
    
    But if you're in the US operation, and you don't have a strategic 
    specialty (and calling yourself a client/server consultant doesn't
    hack it anymore), and you don't have a customer willing to step up
    and say that you are the key person for a multi-million dollar job,
    then your chances of surviving the transition start to dwindle.
    You may survive as a favored contractor rather than a permanent
    employee. If you personally have some business savvy, then you may
    well benefit from that type of arrangement. I know a fair number of
    people (techies) who developed these skills and turned a $50k salary
    into $150K or more a year doing independent consulting.
    
    As always, your mileage may vary.
    
    Geoff

    re .41
    
    >But the nodename looks Asian.  So's .39's.  I still see no evidence
    >that DC ever intended to take more than a token number of US
    >contributors.  They probably want DC outside if the US.  Plus a big
    
    If it's any consolation (probably not), I work for DC in New Zealand,
    and we've already been told by management that CSC have not included
    NZ in their (prospective/possible) purchase.  Can you see corporate 
    maintaining a presence out here, in conflict with their proposed 
    structure?  Not.  
    
    regards,
    Joyce
    

re several previous

In the old days it was true that when defense contractor 
bought out another or won contract held by another they
would keep most of the workers and fire most of the 
managment. Talking to to friends who are still in defense
it seems things have changed. Most contractors have excess
people, so when they win or buy new work they fire almost
every and replace them with their own people. 

    with 26,000 employees and 2,6 billion $ ('94), all they need is more 
    turnover for their workers - they do not need any managers &/or workers...
    

Ant truth in the rumour that Gresh has resigned ( as a result of 
CSC pulling out of DC sale )?

Hard to know the facts from the fiction ( from the malicious )

Re .-1.

Just had the information that G. Brebach DVN scheduled for tomorrow 28 jul 1994 
has been cancelled. 

Any explanation / comments ?

<headers removed>

    THE DVN BROADCAST SCHEDULED FOR JULY 28TH HAS BEEN POSTPONED PER THE 
                         FOLLOWING MESSAGE:


    *************URGENT--DIGITAL CONSULTING DVN POSTPONEMENT*********
    
    PLEASE CIRCULATE THIS MESSAGE THROUGHOUT YOUR ORGANIZATIONS AS SOON AS 
    POSSIBLE.
    
    I am sorry to announce that we must again postpone the Digital 
    Consulting DVN that was scheduled for 28 July. 
    
    As you heard from Bob Palmer last week in his DVN message, "Digital's 
    capability in systems and network integration is absolutely essential 
    to deliver our core value proposition to our customers."   He 
    reiterated Digital's commitment to this business again yesterday, 26 
    July, in an analyst meeting when he said, "...let me clarify that we do 
    not intend to sell this critical segment which is a central component 
    of the value we deliver to customers..."
    
    Because Digital Consulting is key to the fulfillment of this 
    capability, the Senior Leadership Team of Digital is examining how best 
    to structure this business to achieve maximum growth and profitability.
    
    I expect decisions to be forthcoming over the next two weeks. My staff 
    and I have heard from many of you, and we are aware of the issues that 
    concern you.  Therefore, I feel it is best to delay the DVN broadcast
    so I will be able to fully answer the questions I know you have.  
    
    I have asked for the DVN broadcast to be rescheduled at the earliest 
    possible opportunity.  As soon as the satellite time can be verified, 
    I will notify you of the date.  You have my personal assurance that 
    the next DVN broadcast will not be canceled.  Thank you for your patience 
    and your continued support.
    
    Regards,
    
    Gresh
    GTB:ajs.

>    Because Digital Consulting is key to the fulfillment of this 
>>>    capability, the Senior Leadership Team of Digital is examining how best 
>>>    to structure this business to achieve maximum growth and profitability.

    re .1 :  please remember NewSpeak.  Words and phrases like 'structure
    this business', 'maximum growth', 'key to the fulfillment' and
    (remember this one?) 'achieve optimum size of organisation', do not
    always necessarily mean what you think they might mean.
    
    In fact, if they did mean what you think they meant, there would be no
    reason to use them.  is that clear?

    re: .49
    
    Read this as "SLT is trying to decide if DC should be a separate
    division".  Brebach already defined the structure ("Looking Forward");
    now he wants the SLT to untie his hands so he can do it without saying
    "Mother may I?" every 10 minutes.
    
    
    re: Brebach
    
    I doubt you'll see him leave unless the SLT trashes "Looking Forward".
    One who should know about such things told us it isn't being considered.
    
    -- Russ

�    now he wants the SLT to untie his hands so he can do it without saying
�    "Mother may I?" every 10 minutes.
 
Considering the rather ethereal proportion of female representation on the SLT,
what Gresh is more likely to say every 10 minutes is "Father may I?".   ;-)

Regards, Stephane.


P.S.: no, don't start a discussion on Equal Employment Opportunities here!  If
      you want to do it, there's certainly another note on that topic.

    I can think of at least one reference to the SLT that includes the word
    Mother.
    
    ;^)
    tony