Eye on the States

Sept. 11 brings EDS, Unisys back into the game

Tom Davies

Many companies are asking themselves what has really changed in state and local government since Sept. 11.

For at least two leading integrators, Electronic Data Systems Corp. and Unisys Corp., homeland security has been a wake-up call, reminding them of the importance of the government marketplace. And, in good part as a result of the terrorist attacks, both companies have taken steps to reposition themselves as state and local market leaders.

In many ways, these two have traveled similar roads in state and local government. Both have deep roots in this market, yet both saw their premiere market positions slide over the past five years. Some of the drop for both could be attributed to new corporate leadership, raising hard questions about the value of their government businesses in the dot-com era. Government was so out of favor, both companies seriously thought of divesting themselves of part of their government businesses.

Both companies grew their state and local businesses to more than $500 million annually by establishing themselves as leaders in areas such as health care claims processing and eligibility determination. Each also launched very aggressive market expansion campaigns during the 1990s.

Yet EDS and Unisys ran into serious expansion problems. They found formidable competitors occupying market niches, such as transportation, that were growth targets. And while both companies were initially successful at winning mega-size health care and human services contracts, they soon stumbled in their delivery. Problem contracts set both companies back, and it took years for them to recover.

Despite these problems, EDS and Unisys were in a good position to capitalize on electronic government when the Internet exploded. They certainly had the customer relationships and capabilities to do so. Yet upstarts, such as National Information Consortium Inc., the Big Five consulting firms and other market leaders, such as IBM Corp., moved faster in state and local and came away with the lion's share of the opportunities.

At one time, EDS and Unisys had deep bench strength when it came to mobilizing talent at all levels ? management, business development, technical and operational ? in support of state and local. Many who worked on their front lines had years of firsthand experience working with and for state and local governments. But over time, this expertise was lost as people left and were not replaced or moved to other positions.

Now as EDS and Unisys are taking steps to re-invigorate their government businesses, state and local is getting a fresh look. New leadership is being brought in from outside.

Greg Baroni, formerly a top executive of KPMG Consulting Inc., is now president of Unisys Global Public Sector; and Anne Reed, formerly chief information officer at the Agriculture Department, is now heading up EDS' state and local business. Senior leadership is once again publicly talking about the importance of the government market. And both are closely examining how they should roll out homeland security initiatives.

It will take more than a new coat of paint for EDS and Unisys to regain their state and local market leadership positions. Their underlying value propositions, organizational structures, capabilities and go-to-market strategies need to be re-examined from top to bottom.

Their competitors that understood the importance of the government market have not been standing still. They have expanded their market presence, acquired new capabilities and become even more focused.

EDS and Unisys have a lot of hard work ahead, but no one ever said that playing catch-up was easy.

Thomas Davies is senior vice president at
Current Analysis Inc. in Sterling, Va. He can be reached at tdavies@currentanalysis.com.

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here

Washington Technology Daily

Sign up for our newsletter.

Terms and Privacy Policy consent

I agree to this site's Privacy Policy.


contracts DB