EDS Exec Brings New Twist To Federal Strategy

By Nick WakemanWilliam Dvoranchik may not reinvent the wheel as the new president of Electronic Data Systems Corp.'s federal unit, but he will push the Plano, Texas-based systems integrator to introduce more commercial practices to the federal sector.Calling EDS one of the best-kept secrets around, Dvoranchik said he plans to re-ignite the company's growth engines by plugging its solutions and chasing emerging opportunities, such as wider use of smart cards by the Department of Defense. Dvoranchik, who replaced George Newstrom in September during a restructuring that streamlined business lines, also plans to focus on delivery excellence to set EDS apart from its competition.The 28-year company veteran most recently headed EDS' failed effort to secure a contract with Connecticut to run the state's information technology services, but EDS Chairman and Chief Executive Dick Brown saw something in Dvoranchik he liked.In an interview with Washington Technology Staff Writer Nick Wakeman, Dvoranchik discussed what he sees ahead for the business. How will the government unit differ with you at the helm? We are growing very well today. We have job openings. We need people. But I want to focus on re-igniting the growth engines. And that is based on customer relationships and making sure we focus on the programs.We want to bring more commercial best practices into the federal sector than we have in the past. We are probably one of the best-kept secrets around. We didn't spend $200 million advertising ourselves as an e-business ... but we have a phenomenal array of e-business products.When we won the New Zealand telecom deal [a July deal worth $800 million over 10 years], the customer came to us and said, 'Why aren't you telling people what you have down here in Plano?' So one of the things we are spending energy on is telling people, 'Look, we have ideas, we are a company that brings solutions.' How will that work in the government market? Here again is a slight twist to what we have done in the past, and it is called delivery excellence. If we cannot meet or exceed the customer's expectations on delivery, then we will not grow.One of the things we are rethinking is how do we get world-class delivery back into the process. World-class delivery starts with knowing what is world-class delivery. No. 2 is setting up customer expectations and managing against that. And once you obtain world-class delivery, you raise the bar even higher. With that, we can start to distance ourselves from our competition. If you really do have delivery excellence, then a lot of the advertising gets taken care of, because people will come to you ... and want to do business with you. Where do you see growth areas in the government market? The entire federal marketplace is a candy store with all these dishes and different flavors. I don't think there is any one area we want to target, but I'll tell you what we want to shy away from: commoditized business. EDS is a solutions-based, software development-based, systems integration-based, outsourcing-based company. Enterprise outsourcing is a very, very good market. It's not for everybody, but it's clearly a market that I see as a great opportunity. What are your growth targets for the government unit? I expect our growth to be in the 25 percent range, and we can probably exceed that. My growth rate ought to be three or four times that of the market's growth rate, and the government [estimates] IT budget growth at about 4 percent or 5 percent. What are some specific projects EDS is eyeing? We are very interested in Department of Defense smart cards. If you look at what we have done, we have the Defense Enrollment Eligibility Reporting System. [EDS won the $85 million contract in 1994.] It has 13 or 14 million people with smart cards [for health care benefits].So DoD already is moving forward pretty well toward wider uses of smart cards. I think DoD is the place where smart cards will have a true impact. I'm excited about the Navy-Marine Corps intranet deal. [The outsourcing project is potentially worth more than $2 billion. A draft request for proposals is not expected until after 2000.] It is going to be a long-term program, and I would like to be part of it. I think we're well positioned for that one. Also, there is the Customs Modernization effort. [A draft request for proposals for the $2 billion Customs effort is planned for release in April.] This type of system has to get information out rapidly to expedite the process. It is all about shortening the information cycle times. When Dick Brown was at Cable and Wireless, he made a lot of acquisitions. Will that happen at EDS and the government unit? Our government business is all organically grown, and I will absolutely look at acquisitions, but I don't want to use that as the growth strategy. We are big enough where acquisitions should be complementary to our business. Is there a size range or type of company you are looking to acquire? Not really, but to me it is like going after programs. EDS likes to go after the larger programs because the effort is similar to what you do for a smaller program. So why not go after the bigger acquisitions than focus on the smaller ones?Plus, if we are going to grow the way we need to, we need to go after the bigger ones. I'm not looking for a hundred thousand dollar acquisition. I'd be delighted to acquire companies in the hundreds of millions of dollars range or as low as $10 million.It is a matter of finding the right one and making sure that we do it, because strategically, it makes sense.