DynCorp to Add BPR Services
Industry watchers say DynCorp's entry into the $220 million business process re-engineering market is necessary for company growth
P> In a move to further heat up competition among Washington's top infotech companies, Reston, Va.-based DynCorp said it soon will enter the business process re-engineering market in a big way.
The $1 billion company is starting its own BPR program to evaluate half a dozen departments at its corporate headquarters. The results, and hopefully, the savings, will be used as a model for DynCorp's launch into the $132 million federal BPR market, which is expected to reach $225 million by 1999, according to San Jose, Calif.-based Dataquest Inc. According to Dataquest estimates, the $2.2 billion worldwide BPR market will grow to $7.4 billion by 1999.
"As business opportunity increases, DynCorp will be a major player in competing for a significant share of that $220 million-plus federal BPR market," said Hank Philcox, chief information officer.
To begin its growth in BPR, DynCorp last month created the Consulting Services Division that employs 400 people at its office in Fair Lakes, Va. A BPR unit will be part of that new division, beginning with about 10 employees who already have expertise in BPR and other related re-engineering disciplines. The Consulting Services Division already generates about $28 million in sales.
"We expect in two years that BPR will be in the region of 10 to 15 percent of our [consulting] business and we would anticipate that our gross revenues would be $3 million to $4 million a year -- that's our business plan," said Philcox.
Under its internal BPR program, DynCorp this month will review its departments -- financial record-keeping, payroll, invoicing, accounts payable and business development. During the four- to six-month process, the company will determine what it takes to become leaner and meaner in the future.
Philcox said the company doesn't expect to cut staff as part of its BPR program, but hopes to prepare itself for future growth without hiring more employees.
"We not only want to prove we can do [BPR and re-engineering] for somebody else, we want to prove we can do it for ourselves," said Philcox.
Currently, the largest provider of BPR to the federal government is SRA Inc., a smaller, but more focused infotech firm in Arlington, Va., that holds as much as $50 million of the current federal market. DynCorp hopes to throw in its lot with SRA and other Washington metro firms.
"They will have a challenge ahead of them because there is a lot of competition in the marketplace," said John Claman, a senior principal at American Management Systems, a Fairfax, Va.-based infotech firm. "Everybody wants to leap into it."
Claman, who has worked on BPR programs at AMS since 1990, doesn't doubt DynCorp's potential for success, but said it has taken his firm several years to get an increasing share in the government's re-engineering market. Although BPR represents only about 12 percent of the company's $630 million in estimated sales for 1995, he said it is essential that infotech companies, whether large or small, have some type of BPR program to compete for the larger consulting contracts. DynCorp "can't grow unless they have it," he said.
Matthew Black, vice president of business engineering and consulting at SRA, said it has taken SRA four years to become a major player in BPR. "Two or three years ago, we used to be special because we did BPR, but now everyone does it," said Black.
As for DynCorp shaking up the market for SRA, which had $134 million in sales in 1995, Black said, "There is a big distance between re-engineering yourself and becoming a major player in the BPR world."
But gaining a foothold in BPR in a year is not an insurmountable challenge. Take PRC, the $720 million federal infotech firm in McLean, Va. Begun in May 1994, the company's BPR group started with several employees and has mushroomed to 53 full-time personnel, supported by 20 subcontractors, said spokesman Jim Smith.
"We have gone from adding more people as we won more and more business to investing in BPR. And now we're hiring good people for future business," said Smith.
DynCorp has reshaped itself as an infotech player in the past five years through a series of acquisitions. Since 1990, the firm has bought 11 firms to give it an infotech footing.
DynCorp employs 17,000 worldwide in three units -- information systems technology, aerospace technology and enterprise management. Although a new infotech player, the firm grew to an estimated $260 million in infotech sales in 1995 and now ranks among the half dozen infotech leaders with headquarters in the Washington, D.C., metro area.