Unisys to form three distinct businesses and dismantle matrix management structure

Business Wire, Oct 6, 1995

BLUE BELL, Pa.--(BUSINESS WIRE)--Oct. 6, 1995--In a move expected to significantly step-up profit and revenue growth next year, James A. Unruh, chairman and chief executive officer of Unisys Corp., said Friday that Unisys will form three distinct businesses, each with its own sales force, and will dismantle its highly interdependent matrix management structure.

He said these actions "were a defining transition point" in the company's transformation. They will allow the businesses to compete more effectively and react more quickly and more fully to the growth opportunities available to each.

At the same time, he said this greater focus in each business will strengthen the company's ability to provide a coordinated services and product approach to a client's information management needs.

Unruh said, "We have progressed in a transformation started in 1991 from a mature traditional mainframe company to where approximately 40% of our business is growing in double digits annually. We have reached a stage where our growth segments have a critical mass and momentum.

"This is a time to unleash the full potential of the company -- and a strategy that is working -- by focusing our businesses in ways not possible before to gain significant market penetration and cost benefits."

Unruh said the current Unisys matrix structure will be replaced with the streamlined decision processes, accountability and dedicated resources characteristic of stand-alone businesses. "We will be faster and more aggressive in executing our strategy of providing technology, applying technology and servicing technology in focused markets."

Unruh said the three businesses are "computer systems;" "information consulting and integration services;" and "global support services." The first is a hardware/software products business and the other two are services driven. Each has unique characteristics and must organize and operate to be competitive with its peers in its market segments.

Based on total 1994 revenue of approximately $6 billion, products and services each accounted for approximately $3 billion.

Information Services

The new "information consulting and integration services" business has been growing at more than 20% annually. Unruh said that starting in 1992, a world-class consulting, vertical solutions, systems integration and outsourcing business has been put in place in record time. Its charter has been to help clients apply information technology to gain a competitive edge and better serve their clients.

"We have passed through the start-up phase which involved considerable effort in putting people and processes in place while growing the business," Unruh said. "We now will fine tune operations, significantly increase our vertical industry solutions expertise, and focus very aggressively in competing with the best of our peers." A president for the business, which is now run by Unruh, is expected to be named before the end of the year.

Global Support Services

Unruh said the "global support services" business will be headed by Unisys corporate vice president G. A. Gagliardi. "We will significantly expand on what has been a major accomplishment in this area over the past five years," Unruh said.

At a time when traditional maintenance revenue is declining because of increased reliability, Unisys has leveraged its worldwide support infrastructure to address new growth opportunities in desktop services, network integration and multivendor support. Total revenue for "global support services" has begun to increase from a low in 1993.

The traditional maintenance piece of this business has dropped from more than 80% of revenue in 1990 to approximately 65% in 1994, and is expected to be less than 30% in 1998. Desktop services, network integration and related services have been growing at more than 20% annually since 1993. "We see continued opportunities in these areas," Unruh said.

Computer Systems

Unruh said Unisys executive vice president Alan Lutz will head the "computer systems" business. It will combine development and manufacturing operations with a full-fledged hardware and software marketing and sales organization. "Our traditional computer business provided much of the resource and stability that allowed our service initiatives to develop and grow," Unruh said.

"These businesses no longer need the considerable overhead and infrastructure that the computer systems business carried on their behalf. Eliminating these costs will enhance the performance of our traditional business. We will unleash the potential of our technology resources by pursuing new opportunities that we will develop in the Unisys base and among new customers."

Unruh said today's announcement follows an extensive top-to-bottom review of operations and has the full support of the company's board of directors.

Unruh said he is chairing an implementation committee and that a transition team of senior executives will finalize the new structure by year end. The company said its Federal Systems division selling computer systems and services to the U.S. federal government is not affected by the change. It continues to run as a stand-alone unit reporting to the CEO.