Tuesday, 28 March 2017

Come in Cassandra, your time is up! Time to move on.


"Moving on does not mean you forget about things. It just means you have to forget about what happened and continue living."

As CSC turns the page on almost 60 years of existence, we think the moment is opportune for Cassandra to turn the page too. 

This blog started in early 2009 and quickly focused on CSC; in February of that year we gave our reasons for believing that the much-vaunted NHS IT system would not work. We were also concerned about the impact of that project on CSC itself. Sure enough, after three years of booking non-existent profits and top management “looking the other way” to avoid seeing reality, NHS IT almost destroyed CSC and in doing so it contributed to change so fundamental that Computer Sciences Corporation, or CSC, will soon be consigned to history and oblivion. 

CSC’s demise can be traced back over 20 years, to the retirement of a visionary leader, Bill Hoover, and his replacement by the sales and deal-oriented Van B Honeycutt. It is hard to remember today that CSC was a, or maybe was the, global IT services leader under Hoover. The groundbreaking General Dynamics and British Aerospace IT outsourcing deals were won during his tenure. They were followed up by similar wins in DuPont, JP Morgan and others during Honeycutt’s time as CEO. One of CSC’s sales weapons at that time was that client staff who moved over to the bid winner as part of outsourcing deals often expressed a preference to move to CSC with its open inclusive culture rather than what was rightly or wrongly perceived as the more monolithic cultures of IBM and EDS. CSC was also strong in the consulting and software arenas too. Index, the creators of “Re-engineering” became part of CSC, as did Continuum, a market leader in software products for the Insurance industry. So by the beginning of the 21st century, CSC seemed well placed to continue as a global industry leader. 

But it did not consolidate its leadership position, it muddled along seeing cuts to investment in training, people and infrastructure as the way to improve profits. This led to an inevitable decline as services suffered and clients sales stagnated. It focused on “deals” and was slow to respond changes in the market. It still looked for mega-deals when the full sized Apps and Infrastructure outsourcing deals were disappearing; it failed to plan for off-shoring; it missed the insurance BPO market; it created a rewards systems which encouraged management silos with local barons who were absolute rulers of all they “owned” to the exasperation of global clients and of many CSC staff.
Then came the single greatest strategic error in CSC’s history, the nomination of Michael W Laphen as Chairman, President and CEO. The only other strategic error which even came close in its enormity was the decision of the CSC Board of Directors to keep Laphen in place when it was clear to everybody that he was driving the company to its ruin. Laphen’s tangible legacy when he was finally removed from office was a 50% drop in share price, constant revenue declines, declines that wiped all the profit made under his tenure, an SEC investigation followed by fines, class action lawsuits against CSC and himself, $100 million of accounting irregularities, an NHS write-off of $1.5 billion, goodwill impairment of $2.7 billion and amazingly a massive pay-off for Laphen himself. His intangible legacy was the destruction of a once-admired company culture. 

Then in came Michael Lawrie in early 2012 to try to salvage something from the train wreck he inherited. 
We initially thought Mr Lawrie would try to make CSC a market leader again. This was an error of judgement on our part. Instead he focused on driving up the stock price with single-minded (some would say ruthless) cost cutting, off-shoring and shedding jobs, especially those with higher skill levels. His public performances at Investor days and Analyst meetings were polished, articulate and backed up by a consistent set of messages and a convincing CFO to support them. 
From the perspective of the shareholders, his results have been outstanding. When he took over at CSC its share price was around $25. Today it is around $69 per share, but one needs to factor in the $10.5 per share special dividend and the CSRA share price of $29 to get a real comparison point, which is about $109 per share, an increase of over 300% in 5 years. Which shareholder would not have signed up for that performance? And he managed to do this in face of consistent revenue declines and growing discontent from employees who felt they were being treated as expendables. All of which shows us that share price performance today is driven more by spreadsheets of financial indicators generated by professional analysts than by outdated concepts like customer value, employee satisfaction and revenue growth. 

Mr Lawrie’s final contribution to CSC was to conceive and drive a merger with HP Enterprise Services, which is a derivative of CSC’s old competitor EDS. And with this merger we turn the final page on CSC as it becomes DXC. 

So thank you all for reading our blog for so many years and for your excellent comments, opinions, and insights. It was an interesting journey for us. We hope it was for you too. 

Goodbye from the Cassandra Team. If only....sniff...blub..!


 Time to Say Goodbye.


35 comments:

Anonymous said...

Thank you for your insights over the last few years.

Having arrived at CSC through the Continuum acquisition, I have witnessed the decline from the inside all these years. The views expressed here were always very helpful in interpreting the corporate hoghwash from management.

Anonymous said...

Noooooooooo :( :(
Where are CSC staff going to get their information from now?!!
(the management chain? lol, lol, lol)

Anonymous said...

Somebody else bought the redundancy bullet then?

But as the previous commenter stated - where do I go now to get an alternate view of the Corporate BullS#!t that spouts from Mike Lawrie and his lackies.

Have thoroughly enjoyed your (occassionally pointed but often accurate) assessment of all things CSC.

Anonymous said...

Thanks for running this blog. It helped a great deal during the most dark of days.

I'm glad to see your final commentary is just as strong as your first. Best of luck in whatever you do next. Cassandra will be sorely missed.

Anonymous said...

Many thanks for the insights - as others have said you were are more reliable and accurate source of intel than that from the Company (& outfit in Langley) we toiled for
I escaped many months ago, so witnessed the sad decline you have outlined
Managemnet by spreadsheet will never benefit the customer/client or people at the coalface ... shareholders and bonus/option havesters will walk away happy everyone else will crash and burn
Many best wishes for the future - whatever that may hold
Again thanks and good luck...

Anonymous said...

Thanks to the Cassandra crew for speaking the truth and allowing it to be heard.

One last bombshell for readers:

http://assets1.csc.com/investor_relations/downloads/DXC_InvestorDay2017.pdf

This was delivered to investors today, employees won't be seeing this. Page 49 is where you want to start reading...

Anonymous said...

To: Anonymous 28 March 2017 at 22:01

Thanks very much for posting the DXC Investor Day slides. Page 51 by itself is a very clear piece of career planning advice for all DXC employees.

Anonymous said...

I just read those slides and completed my quickest ever game of "bullshit bingo" - fantastic, although I will now need to take a shower for about two hours.

I would add my voice to those thanking the writer/writers of this blog it's been a great source of information and opinion. I have often found out important information before being officially told. (if it was even communicated at all)

Good luck for the future to the writer and all those reading.

Anonymous said...

Re: Investor Slides--

I don't understand how you reduce the number of supply chain suppliers/vendors while supporting a "hire to retire" business process. That is some high end comedy right there.

Also, how does one do "Contingent labor management" WITHOUT a subcontractor? You're basically saying you're going to fire a lot of people and then hire others later. Either that, or rely on 1099 freelancers that can leave at a moments' notice.

And how do you align a location by skill type? What the hell does that even mean? "We're going to make sure all our analytics folk move to Guadalupe!" How does that help you?

Anonymous said...

I would like to add my thanks and appreciation for all you have done, and also to thank you for giving us this space to share our thoughts. The freedom to write here freely without fear of CSC retaliation will be sorely missed.

Anonymous said...

Many many thanks for this enlightening forum - it has helped me a great deal when I worked at CSC and now I have left.
As one person said - at times it was the only form of truth over what was going on - the constant company lies and treatment of its staff being totally unbelievable.
The CSC managers who are left looked after themselves, but you reap what you sow - so I trust their days are numbered and they get back the same in their lives that they dealt out to the loyal staff.
As the guided insights into CSC are now gone its time to stop watching the decaying carcass - which is good as there are better things to do in life.
Thanks again Cassandra.

Anonymous said...

"We're going to make sure all our analytics folk move to Guadalupe!" How does that help you?

The answer is twofold actually:

1) It gives you a good excuse to terminate a whole load of expensive senior people and rehire in some third world crap hole for a fraction of the cost (labour and buildings)

2) When you actually do have physical colocation of teams or skills it does have a positive effect on performance.

Wall Street have lapped this presentation up like crazy. The share price continues to skyrocket.

What they can't see is that pretty much nothing here is unique, its all "me too", much of it once again is from IBM. I guess nobody ever got fired from a CEO role for 100% slavishly copying IBM.

What's more there is no way a plan like this has or even CAN be fully evaluated before execution. This is like redecorating your lounge by putting a grenade in the paint tin. It might redecorate your house or it might blow out your windows and doors and make big holes in the plaster board.

Anonymous said...

>> 1) It gives you a good excuse to terminate a whole load of
>> expensive senior people and rehire in some third world crap hole
>> for a fraction of the cost (labour and buildings)

UNLESS its L1's/L2's. They're exempt from their own LCC policy/strategy.

Anonymous said...

Great job for so many years to this site. And well done on the final write up saying good bye. You wrapped up the sad history of CSC quite accurately in so few words. As I left in 2011 (my choice) I enjoyed coming to this site to hear the truth about what was happening to my old company (and friends). Thank you for the forum.

Anonymous said...

Thank you. I retired from CSC last year after 20 years. Your blog was my source of information. The last few years at CSC was a joke. I was able to escape with a pension. It was a good company to work for in the beginning with great benefits. I enjoyed your blog and all the comments. Good bye, Cassandra.

Anonymous said...

Good bye Cassandra. The site where CSC management were agitated and did not like the truth. Now DXC.. no one cares what is said about DXC.

In linkedin I have posts DXC signs replacing CSC and laphen wannabees saying great.. looking towards journey. What about the 10000plus laid off? I will never ever deal with DXC.

People changing company to DXC. What a sham.

The train crash still scheduled...

Cassandra .. whoever you are..you get my upmost admiration.

Unknown said...

CSC has changed itself to DXC but why should that cause Cassandra to retire?
I can't make the connection...unfortunately.
Nothing is likely to change as a consequence of this renaming... it is likely to be the same old shite in a new bottle, and we would need Cassandra to continue what it has been doing for 8 years now.

Anonymous said...

> I can't make the connection...unfortunately.

Theres a fairly obvious suggestion - BusyBee might have been VR'd/CR'd in one of the metronomic quarterly slash and burn exercises, ahem, "cost takeout opportunities". It would be somewhat harder to maintain such searing insight into csc/dxc failings from the outside, and an opportune moment to move on with life.

Busy Bee said...

Thanks for the compliment.
All Cassandra's insights, or 'searing insights' as you put it were developed from the outside looking in using just the information available in the public domain.
As Little John (Busy' Bee's partner) would have it. "It's All Over Now'
https://www.youtube.com/watch?v=lYXpspbTFOk

Anonymous said...

I wonder whether those who watched today's video of one bell tugging at the end of another will be expected to bill the time to the customer, or will the new DXC turn over a fresh ethical leaf in that regard...

I'm not holding my breath on that one.

Anonymous said...

I thought that this article sums the situation up nicely for DXC.

http://www.zdnet.com/article/can-dxc-compete-in-a-world-where-relevance-and-effectiveness-are-tablestakes/

Anonymous said...

Thanks for the insights from outside for so many years.

I am just worried where I'll get the real facts now...

Unknown said...

Thank you for a fabulous insight into a much loved company by so many genuine hardworking employees but with an appalling management.

Anonymous said...

I agree there are/were many hardworking employees who were loyal and dedicated to eachother and to their clients, despite the company/organisation/strategy rather than because of it. But "much loved company"? Really? Stockholm syndrone? Just how bad does the abusive and exploitative treatment of staff need to get for you to see the company for what it truly is?

Anonymous said...

Thanks for the blog - shame it won't continue. As others have said, a valuable source of insight and analysis.

What is now becoming crystal clear - although the writing has been developing on the wall for a long time - is that the former Continuum and other acquistions' insurance software business is slowly being killed off. Mikey's application of a commodity IT services mentality to the corporate operating model means death for specialist software.

Yes you can dump hundreds of techies today and rehire new cheaper ones next week. But you cannot replace decades (literally) of staff expertise in developing delivering and selling specialist software. The industry expertise walking or being pushed out of the door is not replaceable.

And seeing as insurance software licence fees have been such a high proportion of profit of late, eventually someone will regret this.

It is not being done deliberately, it is simply that an organisational model designed for commodity IT services just does not work for this sort of intellectual property.

The chickens are already coming home to roost here and unfortunately the people running the company today (by which I mean McKinsey) appear not to realise a software business has a different cost and revenue profile to a commodity IT services business. So the spredsheet management WILL result in disaster here. It is already happening and it will not be long before the clients realise.

Insurance software competitors must be rubbing their hands in glee.

Anonymous said...

> And seeing as insurance software licence fees have been such a high
> proportion of profit of late, eventually someone will regret this.

I heard the sales guys sold-off the annual licenses a couple of years back into perpetual licenses. A one-off windfall for them to hit their own targets and scarper at the year-end, before the chicken comes home to roost.
Cutting your wrist to quench your thirst only works in the short term.

Anonymous said...

Cassandra Team

Many thanks for your informative blogs and crisp analysis of the happenings at CSC. Your analysis will be missed.

Completely agree with your analysis that in these times of spreadsheet management minor things like customer management, employee satisfaction do not matter.

Thanks again for running this blog! May the force be with you all!

Anonymous said...

As an ex-CSC'er now reflecting on time spent (wasted?) in the morass of mismanagement, these two links sum up the experience and the malaise very succintly.

http://dilbert.com/strip/2007-10-26

http://brucefwebster.com/2008/04/11/the-wetware-crisis-the-dead-sea-effect/

Anonymous said...

Plus ça change, plus c'est la même chose ...
https://www.theregister.co.uk/2017/05/19/dxc_technology/

If insanity is repeating the same action with the hope of a different outcome, maybe Mikey needs his head read.

Publish your passions said...

Services can serve as added values to physical products such as delivery, after-sales and guarantee services, assembly operations, 24/7 customer support, etc. Cloud based managed services by WPG Consulting

David Mullens said...

Thanks Cassandra - Busy Bee and friends

In Europe in the Mackintosh era CSC was a brilliant place to work, if you needed to put together a world leading team, to provide a solution to clients - and win - it was pretty straightforward; there was a willingness to help and openness ingrained into the culture, that seemed to have no parallel in the competition.

Indeed, the Collection of Small Companies somehow never said enough; at an operational level it felt very much more like a Collection of Friends.
.

Of course the disappointment as Laphen wrecked the company - entirely predictable given what he did in Europe - was huge and surely has not many parallels in the world of contemporary business - Brits may recall the dramatic case of Gerald Ratner, but I can think of no other.
.

Personally I did 5 years in CSC, having had the great privilege of leading a multinational team in a 5 nation Due Diligence and being assigned to Italy as the pathfinder (where I happily remain - thanks Ian).

I climbed higher up the ladder than I ever expected but my time in CSC will surely remain the highlight of a perhaps unusual career but one shared with many CSCers - who remembers the JCC...?

David

Anonymous said...

I remember the JCC - I was on the team who made the JCC in england.. in 2001? Before that i participated in the one i Belgium.

Fun times to be in CSC - But nothing lasts forever. Now I've moved on like Cassandra to another Company where I feel the options are open again like in the old CSC :)

Good luck to everybody. - In or outside CSC / DXC

Anonymous said...

Anyone know whatJCC is?

Anonymous said...

After I joined CSC from IBM, it was apparent when Lawrie arrived that he'd taken the IBM cost saving/shareholder value approach to heart. This is the one that IBM abandoned a while ago as it was ultimately destructive. CSC senior management always seemed to exist in a different plane, and talk a different dialect. I worked with some brilliant people but wasn't sad to depart. I feel sorry for all the people I know from legacy EDS/HP/CSC who are still caught in this crap. Thanks for keeping it real Cassandra.

David Mullens said...

JCC - Junior Consultants Conference (founded in Ploenzke) which got together (at very low cost) junior consultants from across Europe.

It was an excellent example of how good cultural elements from acquisitions could be absorbed into the company as a whole: 1. building a cross-European network, 2. making easier the transporting of skills from one country to another and 3. providing "bottom up" value to the individuals (compare with the Top Down culture of rivals such as Accenture).

As I recall the cost was minimal, but it died during Laphen's European sojourn - to save a few dollars towards one of the Quarters.