Bellcore Bolsters SAIC's Global Network Vision

As the purchase of Bellcore nears completion, Science Applications International Corp. executives are brimming with optimism about the systems integrator's future.

William Owens, president and vice chairman of the board of San Diego-based SAIC, says Bell Communications Research Corp. will add $1 billion in revenues to SAIC's $2.4 billion and expand its base technologies.

While strengthening SAIC's hand in telecommunications, Morristown, N.J.-based Bellcore also offers SAIC a perch in the burgeoning global satellite personal communications system marketplace.

The Bellcore piece will play a pivotal role in increasing SAIC's commercial market share and confer a vision for a total package of IT and systems integration that Owens says will benefit business, the country and the world.

Owens spoke to WT staff writer Nick Wakeman during AFCEA's TechNet '97 conference in Washington.

WT: What will the addition of Bellcore mean to SAIC?

OWENS: One strategic area where we were not as strong as we wanted was telecommunications. We liked Bellcore for their knowledge and their front edge science. They understand how you tie together things in networks and make them work.

Whether it is our national security business or our commercial customers, the whole concept of tying together systems is important. This is not just fiber or [local area networks] and [wide area networks] but networks in the much broader sense.

Bellcore understands what is going on in this world of fiber and radio frequency and the advent of global satellite personal communications systems - Odyssey, Iridium, Globalstar, Teledesic, Cyberstar, etc. - and how we then use this whole trillion dollar plus network.

The United States spends $25 billion a year on military communications but five years from now, the [Pentagon] might be able to say we can replace that with commercial technology. That might save $10 billion a year. This type of vision is going to be extremely important.

Bellcore is a very important part of what will be an SAIC total package of IT and systems integration that's not only a very good business for us but is terribly important for this country and solving the world's great problems.

WT: When do you expect to close the Bellcore deal?

OWENS: We have to get through approvals by the public utility commissions in the individual states. We are very hopeful it will close in the next few months, if not in a few weeks.

WT: What type of opportunities is a tighter federal budget creating for SAIC?

OWENS: The budget is causing agencies to review their programs in profound ways. That means there may be an opportunity for the kind of smart solutions that may not have been there when the budget was fully funded.

If we do our work right, we can make contributions to the agencies that can be profound in the way we do business - whether that is privatization or smarter systems.

Smarter transportation systems could be very important in meeting some of the budget hits that the agencies are taking. We have worked with the military commanders as they have taken shortfalls in their budgets and tried to find ways where we could do things cheaper. This is going to be good business for us.

WT: How is SAIC positioning itself to take advantage of trends in the federal market?

OWENS: Many of our government customers are faced with real issues that demand smart solutions. With the addition of Bellcore, SAIC has some of the broadest technologies in the country.

We are very much into environmental remediation. The area of privatization and what we do with government property is a big deal, and SAIC is well-positioned to be helpful in that area.

In the area of health care, SAIC is exploring ways to make doctors as efficient as they can be. One is the Combined Health Care System, a $1 billion contract with the Department of Defense that developed a remarkable technology. It allows medical records to contain X-rays, even video of a sonogram of your heart beating. There is an interface that allows hundreds of thousands of people to share that information at facilities around the country and even at foreign bases.

National security has been the mainstay for SAIC for a number of years. I have talked about the importance of sensors, communications and precision weapons as elements of the revolution of military affairs. The issue really is smart warfare. All this is very good business for SAIC.

WT: SAIC plans to increase its commercial business to 40 percent or 50 percent of overall revenues. How is that transition going?

OWENS: We are the lead information technology company for British Petroleum. We have about 1,600 people working in Caracas, Venezuela, for an SAIC company called Intesa, which is the information technology company for the Venezuela National Oil Co., the second largest oil company in the world.

We do a lot of work with Aramco in Saudi Arabia; we are very much into oil and gas outsourcing.

Moving from the government business into commercial business is a bit of a challenge for us. Bellcore will help us since they are 98 percent commercial; they will help us learn a lot and they will be an important part of our technology stable.

WT: How is work progressing on the global problems project you announced in January?

OWENS: It is an important responsibility for us to continue the debate on the 11 global problems that I thought we should focus on. We had a seminar on the world's water supply [in early June].

We've spent a lot of time developing that list of problems and then trying to understand these problems. It is one thing to build the list. But it is another thing to say what does it really mean and what we can do that can make a big difference.

[The project] is becoming a part of our awareness. Whether it is energy, disease, food or support for the middle classes in Third World countries. These are important discussions and they keep our vista from being completely focused on the here and now.

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