Tuesday, 24 January 2012

CSC management exodus, another one on his way out?

The next senior executive on his way out of CSC could be Andrew Mears, Corporate Vice President of Internal Audit.

Last week, CSC announced Peter Minan, currently a partner with KPMG, as Corporate Vice President of Internal Audit.  There was no mention of Andrew Mears  in the announcement(another 'disappearing'?)  .  This approach is often used by CSC to let people deduce that an executive is leaving the company, which makes us think Mears’ days at CSC may be numbered.

Mears was promoted to head up Corporate Internal Audit after a successful stint as European Controller.  CSC did not replace him as Europe Controller, preferring to reduce costs without regard to the lack of control that losing such a post would mean. Thus one has to assume the removal of this role was approved at the highest levels within CSC.

We have seen the consequences of this ill-considered decision, which is one example of the systemic weakening of CSC’s Finance function in Europe. The Nordic accounting irregularities could not have reached anything close to $100million if there had been a European Controller monitoring unusual balance sheet movements.  But there was no longer any European Controller monitoring the balance sheets. We assume nobody else was looking at them in much depth either, given how large the Nordic irregularities became before CSC realized something was wrong. 

Maybe everyone would have been benefitted if Andrew Mears had never left CSC Europe Finance.

Sunday, 22 January 2012

CSC – the beginning of a management exodus, but are the right people leaving?

In our January 16 posting (“Senior managers exiting CSC”) we wrote about executive departures. So far, we have learned that:

Gary Mellor (President, COO Managed Services Sector (MSS) was told to leave CSC about 10 days ago. He was followed shortly after by Andy Williams, President, Managed Services Sector (MSS) EMEA, who was in charge of CSC’s UK and Nordic businesses.  Williams joined CSC just a couple of years ago, replacing Nick Wilson who only stayed for about two years before leaving for Hewlett Packard.

Williams left days after CSC got a first view of its results for the quarter to December 2011.  Could his sudden departure mean CSC is about to announce yet another disappointing quarter? Or has he failed to clean up the problems he inherited in Nordic? Or maybe he just hasn’t cleaned them up fast enough for the liking of CSC Corporate management.   Andy Williams’ short stay at CSC begs the question of whether he was the right person for the job. But it also raises the question of what support he got from EMEA and Corporate management. We heard that he was frustrated by the assignment of unrealistic financial targets, and constant micro-management from above.   Sounds familiar doesn’t it?  CSC may now be regretting the actions which caused Keith Wilman, the successful former President of CSC UK, to quit CSC to pursue his career elsewhere in 2007!

Another senior executive on her way out of CSC is Kathleen Ramey, the Worldwide VP Finance for Managed Services Sector (MSS).  Her departure has shocked many CSC employees because of her track record of success and the respect she enjoyed throughout the company.    She was a 20+ year veteran who spent a number of years in Europe, including serving as VP Finance for CSC UK.  We understand that Ms Ramey is another victim of problems in the Managed Services Sector.  

CSC seems to have started dealing with senior executives whose performance is considered below expectations, we wonder if they are correctly identifying the executives responsible for the company’s failures? 

Guy Hains - President EMEA, seems to escape all accountability for the Nordic irregularities and for the NHS project failure.  Not only did they both happen on his watch as CSC’s President of Europe, but he also had more direct management involvement in them. We understand he was on CSC’s Board of Directors in Nordic at the time of the irregularities; he was the also the lead CSC executive on NHS NPfIT project team which included selecting the failed software supplier iSoft.    The project that led to the single biggest write off that CSC has ever taken. How much bigger has a problem got to become and how much more involved has an executive got to be before he takes responsibility for the results?

 Similarly no senior executive has been held accountable for the steady decline of the European Finance function (remember this is the function that has lost the leaders in every single country, even prior to these recent issues). European Finance deteriorated to the point where irregularities such as those in Nordic could occur in the first place, and then could go undetected for so long.  This decline did not occur overnight. It has to be the result of years of executive mismanagement and an inability to retain many of the best Finance managers and leaders. Yet no action has been taken at either EMEA or Corporate Finance levels.  Why not?

And are there more departures still to come?

Thursday, 19 January 2012

A Look Back Three Years

it is now three years since we started blogging about NHS IT and CSC and it is probably timely to look back at what was said at the time and see how matters have developed. Just look at this extract from Sunday, 8 February 2009

Let's look at some basic facts about NHS to see there is anything there that explains why the IT Strategy has gone very wrong.
1. It is the largest single IT project anywhere in the world.
And still is.
2. It is charting new waters and just like Starship Enterprise, goes where no one has gone before.
This never arrived.

All the above tells us that this is going to be high risk, high spend, slow and very difficult. Yet as the single biggest project in the UK government the NHS IT is not reviewed regularly at any depth by the Cabinet.
Thus our political leaders have let us down.

without a wholesale restructuring of NHS it looks like a recipe for failure .....

They (The Conservatives) also have the problem that Andrew Lansley MP, Shadow Health Secretary, has had a charisma bypass and is almost invisible to the public. What does he stand for? What will he do to improve matters when in power? Is he just waiting for Labour to fail and is keeping quiet because he has so little to add, confining himself to unambitious tinkering at the edges of NHS. This week his flagship programme to change NHS has been put on hold.

This package iSoft was originally designed to work within the precincts of a health practise and by all accounts worked quite well. The problem is  the solutions providers, CSC and others, to base their solution on this product. ..... unfortunately as anyone with experience in IT will tell you, taking a small scale system and stretching it to a wider geography, across multiple locations, with hundreds, if not thousands, more users, is doomed to failure. As has happened.
 In essence scaling iSoft up to mega health region size is rather like taking a tug boat design and turning it into an aircraft carrier. It might float but will it be fit for war?

.... there has been the problem that many of the iSoft founding management left as fast as they could once they cashed in the share options based on an inflated share price due to iSoft being part of NHS IT. Some of this management have been investigated for corruption.

The technical solution to all this is supposed to be Lorenzo. What odds am I offered that this will work on time too? How about 100-1? What a pity that no one took up this bet.

But surely the systems integrators with the NHS contracts can make it work? Unfortunately they have found out they have bitten off more than they can chew. As mentioned before Accenture a world class systems integrator has cut and run. Others will almost certainly follow soon. Indeed, Hitachi subsequently did just that.

Where does this all leave us? It leaves us with £18bln spent on IT that won't work or won't be used because the client has decided to buy elsewhere, and with NHS trusts who are going to commission their own solutions. This is now the case.

.. it would be cheaper to give each of NHS's 1,500,000 employees £10,000 each to buy their own IT to help do their job better, and leave £3bln spare for central work.

Further reading to show there are solutions to the NHS problem and that this blog is constructive can be found here or just by browing earlier postings:

Wednesday, 18 January 2012

CSC – yet another lawsuit, yet another flagship project mess and yet another reason why the company won’t be acquired any time soon

CSC was hit with another lawsuit on January 16.

The plaintiff alleges that the directors breached their fiduciary duty by failing to disclose alleged accounting and financial irregularities in the Managed Services Sector segment, primarily in the Nordic region, and Computer Sciences’ performance under its U.K. National Health Service agreement and alleged failure to maintain effective internal controls.  Full details on:

And it has another failing healthcare megaproject
CSC has also been slammed for delays and overruns in a major Medicaid project in North Carolina.
As disclosed by “The Point” on January 15  a North Carolina state government audit estimates that cost overruns could reach $320 million and the project is significantly behind schedule. It also makes the point that some of these delays and cost overruns should have been foreseeable with a little more digging. In fact, they were foreseen.

Amazingly, CSC uses this failing project as a public reference on its website, saying that

“For more than 30 years, CSC has been a trusted partner to state Medicaid agencies. North Carolina is the latest to count on us for its Medicaid Management Information System (MMIS)”.                                                                     (source : http://www.csc.com/public_sector/ds/11254-mmis )

Is CSC management even aware of the reality of what is happening on the project or is it in denial again?
And why we think CSC won’t be acquired any time soon
There are simply too many risks to CSC’s business which cannot be quantified right now.  
How much will the Class Action lawsuits cost? What will be the outcome of the SEC investigations into the accounting irregularities?
What will be the outcome of the NHS IT project situation and how much will that cost CSC? What about the other distressed major projects like the North Carolina Medicaid?  What might they cost? Given these problems in the healthcare industry, can CSC justify the carrying value of the  iSoft goodwill on the balance sheet?  Are there any more bad projects under the surface? (Danish Customs and Tax??). CSC has withdrawn its earnings guidance,  so there may be more bad surprises to come in the financial results.    

The potential magnitude of all these risks will likely dissuade anybody interested in acquiring CSC, or at least cause them to wait for some more clarity.

posted by Littlejohn

Monday, 16 January 2012

Senior Managers Exiting CSC

News is reaching us of more and more managers (Presidents and Vice Presidents) leaving CSC  recently. Also the list of company officers, a significant role, have mysteriously changed.. Why would that be?
These seemingly arbitrary changes, which leave large gaps in the organisation, are rather like those that that happen in Banana Republics in South America where 'disappearing' people is common. Who is next? When are they next? If you are senior in CSC beware the late night knock on the door or phone call.
Meanwhile Laphen and co are comfortably riding out their tenure ready for the massive pay offs coming their way in a few months.

What is the plan for the staff, employees, and customers, and the investors? Who is running the place?

Watch this space for more news later this week.

By the way, this loss of senior people is nothing new in CSC. Read this post from 2010

Earlier posts also mentioned that CSC lost over a short period the financial leads in every country in Europe. It seems extraordinary that there is such a high turnover, particularly in the back office finance functions. One wonders why that may be.

comment posted on WikiCSCleaks
Anonymous said...
Andy Williams marched out of the offices last friday...

His laptop not with forensics in the uk re the reporting issues

19 January 2012 08:40

Posted by Thenewsgroup