Why CSC's Jim Sheaffer is bullish on the government market

As president of CSC’s North American Public Sector, Jim Sheaffer leads the company's largest business unit, serving agencies of the U.S. and Canadian governments worldwide. He spoke recently with Senior Editor David Hubler about current and future CSC goals and IT market trends.

WT: What are CSC’s goals for 2012?

Sheaffer: Our goal of making a significant contribution to CSC’s overall financial performance and providing value to our shareholders hasn’t changed at all. How we go about that is changing a bit. In this kind of a market we’ve got to be able to deliver value to our government customers that enable them to become more cost efficient and help them meet the budget challenges they all are facing. Serving customers today means demonstrating that we can help them deal with the budget pressures they’ve got and still carry out their mission. The question really comes down to what is it that CSC can offer that provides a different or better value proposition than what others can. That comes back to CSC’s strengths: being in this business for 50 years, understanding the mission, people and processes; and having a comprehensive array of IDIQ contracts.

WT: How difficult is it for a corporation to shift gears, acknowledge tight federal budgets and make pricing a major facet of the sales effort?

Sheaffer: Government buyers’ emphasis on “low price, technical acceptable” is sort of driving them in the direction of saying “we don’t want to pay any more than we have to. So if you can devise a solution that gets us a price point better than anybody can, then you’re going to get the business.” That sends a signal to industry that the era of best value is suspended, at least for a while, and the interest is in “get me something that works and give it to me at a low price.” We are among a number of companies that understand this because it’s the way business is done commercially. It’s a move toward buying things as a service rather than the traditional way the government has bought things. You see this most clearly in the current cloud discussion. It may change the way your accounting works and it certainly changes how your business development people operate.

WT: What are the coming big opportunities in the government market?

Sheaffer: Some of them are here now. The era of mobile computing is certainly here and so is the ability to meet the expectations of people coming into the government workforce who have an expectation of what will be available to them on devices that they carry with them. Some say the military is already very aggressively moving in that direction. Mobile computing is here but dealing with it at scale is going to have a major impact on our business. Another opportunity already here is big data. It’s not just the intelligence community that is overwhelmed with information, the health industry is also. So to support decision-making with big data is going to place major demands on agencies and companies and suppliers.

WT: Do you envisage CSC becoming more involved in partnering and M&A activities?

Sheaffer: As a systems integrator, our lifeblood and our success depends on our ability to partner with people who are creating the technology. That has been and remains a key element of our business model. As to acquisitions, we have got to make sure that we deploy our capital in a way that generates the greatest return for our shareholders. Because of our size and international reach, we don’t have to look for large companies to buy. In the past couple of years we’ve looked for small acquisitions where we can get access to intellectual property or capabilities that we don’t have. I believe we’ll see some continuous activity with that approach.

WT: What has CSC learned from its security problem in building a cloud-based Google e-mail system for Los Angeles municipal workers?

Sheaffer: From my point of view the implementation has been mostly positive. We viewed it as a real opportunity to better understand what it would take to successfully deploy cloud computing for a large government organization. Today there are 17,000 employees in Los Angeles who are using Google mail and a public cloud to get their work done. The city is saving a lot of money. We’re in a far better position today to understand, from a contracting and implementation point of view, of what it takes to make it successful. The element that gets the most press was the security needed for the Los Angeles Police Department. All of us learned a fair amount about what the issues are in a city government environment associated with security. Frankly had [security] been a requirement at the outset, Google might not have been selected to bid the contract. But that was a condition that was imposed after the contract was signed.