CSC Makes Its Mark on State and Local Markets

The industry titan is hoping its unique across-the-board focus on the state and local market pays off

P> When Stuart Nelson joined Computer Sciences Corp. in 1992, one of his goals was to make the company a powerhouse in the state and local market.

He's making progress.

In 1993 and 1994, VARBusiness magazine proclaimed the company a winner in its annual Integration Solutions contest. The 1993 award was for work performed to support the Massachusetts Water Resources Authority cleanup of Boston's harbor. The 1994 award was for revamping Minnesota's Department of Revenue. The company also has won several large contracts - including re-engineering New York state's tax process.

However, CSC, which is a titan in the federal and commercial markets, still has a way to go before state and local contracts make up more than a small part of the company's business. The firm's approximate state revenues of $70 million are just a tiny drop in the bucket when compared to companywide $4.1 billion in revenue.

CSC is ranked second in Washington Technology's Top 100 federal prime integrators, with total contracts worth approximately $9.5 billion. In the state and local arena, G2 Research Inc., Mountain View, Calif., ranks CSC the eighth largest services vendor.

"We're not widely known for what we do in state and local," said Nelson, a partner and manager for the government services practice of Computer Sciences Corp. Consulting.

Michele Walsh-Grisham, vice president of G2, a market research and consulting firm that specializes in state and local markets, characterizes CSC to date as a "reactive" player in the state and local market because the company appears to have no organized plan of attack.

Partly, that may reflect CSC's culture and sheer size. As such, it is easy for the right hand not to know what the left hand is doing, said Milford Sprecher, vice president of state and local services for Federal Sources, a McLean, Va., market research and consulting firm.

Nelson explains the company's strategy this way: CSC doesn't concentrate on one vertical niche, such as criminal justice or transportation, the way many contractors do. The strategy instead focuses on the horizontal re-engineering market -- an area that CSC's Index unit, led by re-engineering guru James Champy, literally invented. CSC helps state and local governments re-engineer across all niches to provide better services to citizens.

The company may develop strong regional hubs for state and local activity over the next two years, hinted Nelson. Possible areas include the East Coast, the Midwest and the South and West.

There are few niches that the company is not qualified to perform, Walsh-Grisham said. So far, most of CSC's state and local wins have dealt with Medicaid, revenue processing or geographic information systems.

Approximately 70 percent of all the state and local business is from current or former clients. "One of the things that sets CSC apart is that we don't advertise. We win work by how well we perform, not by how well we advertise," Nelson said.

In the tight-knit state and local community, information systems managers often check with their counterparts in other states for advice so a company's reputation is critical. "Our success can only be measured by the success of our clients," Nelson said.

Considering what they've accomplished without a central focus, Walsh-Grisham believes CSC could be a real powerhouse.

A CSC State Success Story

Re-engineering the Minnesota Department of Revenue sales tax system often is considered one of Computer Sciences Corp.'s biggest success stories in the state market.

The department faced the dilemma of trying to do more work on an ever-shrinking budget. So when the state legislature allocated funds to purchase a new sales tax document processor, the department decided not to purchase just another piece of technology, but to completely re-engineer its processes.

There is no way to estimate the amount of money saved, but it is obvious that the re-engineering has produced tremendous benefits for the state, said Greg Tschida, project manager with the Minnesota Department of Revenue. The department formerly processed 1.4 million returns annually. That number has now been reduced to 728,000 returns - approximately a 41 percent decrease in forms. And revenues collected have increased by more than $4 million.

The changes were accomplished by completely rethinking how the department processes returns and collects delinquent taxes. The ultimate goal was to simplify what people were required to do so that they would comply.

One of the most obvious changes was a redesign of the tax form. Approximately 80 percent of Minnesota businesses now receive a four-line return instead of a form that is two legal-size pages. The change is possible because when taxpayers register, they are assigned a unique identifier and an individual file is created for them. When it's filing time, information in the record is used to create a customized tax return that collects information on all relevant taxes. Previously, businesses had to fill out a standard form for each tax that applied. Now information on 30 different taxes can be handled on one form, Tschida said.

If a legislative change to the tax code occurs, the form can be updated in a matter of hours instead of weeks. Additionally, the form has reduced the processing time for taxpayers' registration. What used to be a six-week wait now takes five minutes.

The taxpayer's customized record also allows the department to alert taxpayers about changes that might affect them, as well as provide information on educational resources about the changes.

Under the new system, employees track a delinquency case until they can collect the funds due the state. Previously, delinquency cases would be passed from one employee to another. By keeping one case with one employee until it is resolved, the department hopes to reduce the time for debt collection, as well as provide a smoother process for taxpayers.

If a debt is 10 days overdue, a worker will call the taxpayer to check on payment status. This has helped collect 96 percent of the money owed the state within 90 days. Prior to using the phone call reminder, only 24 percent of late accounts were collected within 90 days.

Because individual records are available, the department can check whether this is the first time a taxpayer has been late, or whether they are a habitual offender. People with good records receive more lenient treatment. Those who are chronic abusers are handled more firmly from the start with the threat of an audit reserved for the worst cases.

The ability to track this information almost didn't make it into the software because the state didn't have the money to pay for it. However, when CSC developers discovered the feature, they included it.

CSC really tried to understand what the state wanted to accomplish and helped them meet those goals, said Tschida. He also said CSC approached the task as if it were a partnership -- the company helped deliver solutions, not just to a computer system.

Businesses also are able to file taxes electronically.

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