(from an email to a private group)
Some in the board finally started to see what is going on. Under his leadership, the company has been adhering to an unsuccessful offering-led strategy, reminiscent of a gambler persistently betting on a losing hand. The offering-led model is nothing but overpriced and uninspiringly bland powerpoint presentations backed up by no prior experience or differentiating capability that features an excessive number of overpaid VPs overseeing nothing more than shadow IT and shadow busops in their limited domains consistently delivering declining revenue. Over the past six years, the book-to-bill ratio consistently ran below 0.9, win rates have been exceptionally poor, and revenue generation costs surged, becoming by far the highest in the market. Consultant rates are uncompetitively premium. At this rate, the company is projected to run negative cash flows by the end of the next fiscal year and may cease to exist within less than three fiscals. In the current market, for any competitor acquiring the company's business and employees via targeting its contract renewals is a more viable and cheaper acquisition strategy than acquiring the company outright.
The task for Raul and his successor is simple. Become more like Lxsoft. To significantly slow down this rapid downward spiral to offering-led oblivion, the company will abandon the offering-led model that leads to frivolous overheads, uncompetitive consultant rates and stupidly pretentious positioning in front of customers. Instead, the company will implement decisive cost-saving actions, not necessarily becoming a giant ‘body shop’ though all growing competitors have been effectively switching to this competitive rate strategy over the past years and are very successful with it. This involves streamlining the organization through consolidation and delayering for a more competitive rate structure, and eliminating non-essential offerings teams along with all redundant vp and director roles centered around offerings. The IT organization, which has grown significantly with an unexpectedly large quantity of vps overseeing an overly complicated it landscape, will be fully placed under the cfo with a renewed focus on systems simplification and organizational flattening. Unification of csc and entserv entities under a consistent legal structure in markets has yet to occur (six years into the spinmerge) and will be expedited by the CFO with all IT resources under their ownership. Account exec and ADL roles will be merged. Manager spans will be increased to 60+ employees. Sales teams will be simplified and centralized globally, targeting deals over $20 million regardless of offering and area – offshored wherever possible, as most are glorified process managers anyway. All operations, account execs and delivery will move under the COO, consolidated in a manner entailing all local, regional or global delivery center teams. By drastically reducing overhead, flattening the organization, eliminating unnecessary offerings that consist of bland powerpoints and complicated spreadsheet content that no one understands, can sell, or will buy, the company will maintain competitive rates to halt revenue decline, potentially even enhance employee retention through small annual salary hikes.
11 replies (most recent on top)
Real Bagel, Mate any more saucy news before the Global townhall Royal orchestra?
Please hire more paper pushers and bureacracy managers and we will fast forward our way into bankruptcy.
@1hgw+1qpQDpt6 My thoughts exactly from what I've been able to gather the decision was made in roughly a 2 week time frame. Would poor finacial results really trigger this?
We will never know the truth behind why Mr Shoutly was removed from Chairman and CEO immediately, it wasn’t for cause otherwise they wouldn’t keep him on till March.
So people at DXC spill be beans !
Some of the observations are bang on.
Layers of VP's,
Offering led disaster.
Over complicated backend internal systems
Loosing most of the deals to competition.
Real Bagel is a fly on the wall
Let me start by saying I am not an employee I think a lot of what you say is accurate but the peices dont fit togeather. Something very sudden happened that caused Salvino's departure. Why on earth would DXC announce Mike's departure a week before Christmas? It's only one more month untill they announce DXC's quarterly earnings. Why not wait untill then to announce it? The last thing the board wants to do is conduct an executive search and do a CEO transition through the holidays. Also you're claiming that DXC is going to under go a huge overhaul this is also hard to belive given that hernandez is a interim CEO who hasn't run an IT company since the dot com bubble also the CFO has only been with the company for what 3 quaters now? On the offering vs regional lead model its weird that everyone here neglects to mention that CSC was originally run under an offering lead model. It was Lawrie who switched the company to a regional model. So why would switching back create so much overhead? (Genuanly asking in good faith here) To me it logically make sense for services people to sell services and software people to sell software. Also why did DXC reaffirm guidance for Q3 and FY24? The peices just don't fit togeather.
@igt+1qpQDpt6 I call BS, yes it might be from an email, but no one with any power would write that in an email.
Written by yet another person without full knowledge of the situation. Problem has been too many knee jerk reactions without a real strategy. Why doesn't someone, other than McKnsy, actually do a full 360 on this company and set it straight. Unless they do a cause and effect analysis, and then choose actions with somewhat predictable outcomes, they will never be successful. Let's examine some of the past knee jerk reactions that did not pay off - hire 50,000 or more entry level people in low countries (someone thought this is how to rebuild as yet another low-cost provider), stop rewarding staff and drive away talent (someone thought this would save money), hire really expense "talent" without a clue what DXC actually can do, convert a global company to a regional model with different treatment of employees, and different processes (not exactly the way to build culture or efficiency). Global offerings were actually starting to work at one point but M2 dismantled them in favor of low cost provider (regional) model. Then when they figured out that they actually need some thought leadership they sought to rebuild them with entry level staff and the ex ACN recruits. But they didn't fix problems with deal tagging and therefore internal metrics led to wrong decisions (GBS gets credit where GIS should in a lot of cases - example SAP on cloud should have a component booked to cloud (GIS), not all GBS) Other examples with Security, Modern Workplace, etc). They only thing M2 got right was fix the internal mess that M1 created. There was some real progress there if you remember the mess under M1 and that was a herculean effort. He also started to communicate but stopped and there became the decline. But when you alienate your best employees, stop rewarding employees, stop communicating to employees, let inconsistency continue to erode culture, hire a bunch of entry level staff and hope they will get some work, and can't grow you lose - BIG. There are a lot of other things too many to list. These are the reasons M2 left. In the end he's listened to the wrong people and couldn't see the forest for the trees. Blaming low level staff for problems is a lack of leadership. In the end it's a complete failure to actually lead and abdicating to less talented people without a plan - they had ideas that "worked" somewhere else but no evidence or actions to make them work here. So many people on this forum see so little of the real company issues. There are parts that work really well but they are handicapped by the rest. This is supposed to be a Layoff Forum. The layoffs/WFRs are coming again, because there is no proven leadership running the ship.
Include the full email (without the to and cc) and I’ll believe this is true
Unlikely this heap of dogs dinner will be sorted out to push the progress through what is needed to improve this company, for one managers will not want to cut other sub managers from the $$ trough, ineffectual processes and procedures + managerial empires will be the same, only difference will be a) cutting of technical IT programming and network staff from high cost centres like US, UK over to far east CC like India, Vietnam, etc.
A manager can't successfully manage 60+ employees, we're doomed ...