Under new CEO, company will focus on tech stack and divest three businesses
Global systems integrator DXC Technology is planning a reorganization that could involve shedding three businesses in order to focus more on its core technology stack.
The Lowdown: CEO Mike Salvino, the former Accenture executive who took over as head of DXC in September, addressed the strategic shift in an online message to customers and employees this week, as well as during a conference call when the company released its second-quarter financial numbers for fiscal-year 2020.
The Details: During the conference call, Salvino described a complex operating model and noted company strengths – including talented employees; global reach; scale in such key areas as cloud, analytics, and security; core competencies; and a loyal customer base – and weaknesses, including problems with execution of programs for larger customers, resulting in delayed revenue, lower margins, and slower bookings.
The CEO’s plan is to reinvest in the company’s enterprise technology stack, which includes IT operations (ITO); cloud and security services; application and industry IP; data, analytics, and engineering services; and advisory services. The ITO business is key to the new strategy, he said. If done well, customers will have more confidence in DXC and return when they need additional IT services.
At the same time, DXC will be investigating strategic options for three other businesses: workplace and mobility; U.S., state, and local health and human services; and horizontal BPS (business process services). Salvino said each of those businesses, while strong, is adjacent to the company’s core focus.
Overall, DXC, which traditionally has run as both a traditional business and a digital business since it was created through the merger in 2017 of HPE Enterprise Services and CSC, will now operate more as a single company focused on its enterprise technology stack. “Customers will see one DXC, not two,” Salvino said during the call.
The Impact: The new strategy comes as DXC looks to bounce back from a disappointing second fiscal quarter, where the company saw revenue drop year-over-year by 3.2%, from $5 billion last year to $4.85 billion. The Tysons, Virginia-based company also saw a net loss of more than $2.1 billion, compared with a loss during the same period last year of $259 million.
The Buzz: “Going forward, DXC will be focused on helping our customers across the entire enterprise technology stack with differentiated industry solutions,” Salvino wrote in his message. “…We’ll be reinvesting in our business to operate more effectively and better serve our customers and our people. Core to this new strategy is a re-emphasis on our ITO business, which is critical for customers. …”