Don’t call it a comeback; they’ve been here for years! Yes, literally almost 150 years, yet very few people today outside of government and certain other sectors can say exactly what Unisys does.
Well, they’re working on that. Last year, the company hired turnaround specialist Peter Altabef as CEO to help restructure the once mighty IT services and products company that kind of lost its way.
Unisys traces its roots back to the founding of American Arithmometer Company (later Burroughs Corporation) in 1886 and the Sperry Gyroscope Company in 1910. Unisys predecessor companies also include the Eckert–Mauchly Computer Corporation, which developed the world’s first commercial digital computers, the BINAC and the UNIVAC.
In September 1986 Unisys was formed through the merger of the mainframe corporations Sperry and Burroughs, with Burroughs buying Sperry for $4.8 billion. The merger was the largest in the computer industry at the time and made Unisys the second largest computer company with annual revenue of $10.5 billion. At the time of the merger, Unisys had approximately 120,000 employees. In addition to hardware, both Burroughs and Sperry had a history of working on U.S. government contracts. Federal government agencies have remained among the largest customers for Unisys’ hardware, software, and services.
However, soon after the merger, the market for proprietary mainframe-class systems—the mainstream product of Unisys and its competitors such as IBM—began a long-term decline that continues, at a lesser rate, today. Although IBM might dispute that claim, as it continues to turn out new mainframes almost annually.
Yet, in response to the downturn in the mainframe business, Unisys made the strategic decision to shift into high-end servers such as 32-processor Windows servers, as well as information technology (IT) services such as systems integration, outsourcing, and related technical services, while holding onto the profitable revenue stream from maintaining its installed base of proprietary mainframe hardware and applications.
Enter the Turnaround
But, after several years of gradual decline in revenue hanging on to its traditional market segments – amid the current “Decade of Disruption”—Unisys appointed Altabef as the new Unisys president and CEO on January 1, 2015 with a mandate for growth. Altabef was named based on his track record of launching or turning around under-performing businesses. He has held CEO or senior leadership positions at MICROS, Perot Systems and Dell Services.
Immediately, Altabef addressed and prioritized the disruptive changes in IT — cloud computing, mobility, big data analytics, security and the consumerization of technology among them. He designed and implemented a new operating model to be a more nimble, focused and responsive company well positioned to serve a “consumerized” business and government mindset. Unisys would focus on bringing innovative, differentiated solutions in the newer growth categories to address clients’ most pressing business and technology problems.
“Unisys is a very important company; it is integral to the history of information technology and technology in general,” Altabef told eWEEK. “It’s a company that still has remarkable people and really important technology, but they had stopped growing. I took the challenge to come in and run the company because I thought there were a huge amount of assets there and by refocusing it I knew we could get growth and increase value for our clients.”
Altabef said he looks at companies in terms of three matrices: What do they do, who their clients are and where do they do it? He said he saw that Unisys was cutting edge in end user services and had strong offerings in cloud, business transformation outsourcing and its businesses.
“We have clients in the technology business in the clearinghouse space that clear $1.3 trillion a day,” he said. “We have built and operate with customs and border protection, a technology system that does analysis around people entering the country that processes 1.3 billion transactions and 60 billion queries a day. So the company had really important tech skills and assets. There is not a definition of big data that that does not completely exceed. So our data analytics capability is extraordinarily deep.”
But what it was missing was the second focus of who their customers were, Altabef said. Unisys had evolved into a horizontal provider of services, rather than a provider of services that was d looking deeply at the industry problems of their clients on an integrated basis and selling integrated solutions.
“So that’s really the primary thing that we have done since I have joined… taking that technology and those assets and going deeper and broader, but also going a little narrower in looking at specific industries and really focusing,” he said.
Unisys Takes ‘Stealth’ Approach to Comeback Trail
In terms of where Unisys does its work, it’s always been global. Unisys serves customers in 180 countries around the world. Fifty percent of its revenues come from the U.S. and Canada, about 29 percent from EMEA, 11 percent from Asia Pacific and 10 percent from Latin America.
Altabef took a programmatic approach to reorganizing Unisys and did so in a somewhat “unorthodox” manner.
“Because the first thing I did was actually around the organization,” he said. “The reason was because the company is 142 years old and had been larger in the past; it still had a host of different organizations. It was almost a spider web all reporting to different people up to the CEO. We had more P&Ls than you would expect. So, organizationally, the first thing we did was consolidate and streamline to two go-to-market organizations: One for the U.S. federal government, which is about 20 percent of our revenues, and another for the rest of our clients, which is about 80.”
Altabef then made some changes in leadership, bringing in new blood to augment existing staff, as well as trimming some areas. Next he set out to bring the company’s cost structure in order.
“As a company with a very long legacy, we had some mismatches in our cost structure,” he said. “So we announced a reorganization that will take out $200 million of run-time annual cost plus more, and that more we will reinvest back into the business. This will both return profit to shareholders and provide more money for investments to fund our growth and higher value solutions.”
Altabef’s plan has several imperatives: To win in key markets, deliver operational excellence, speed decision-making and drive cost effectiveness and fund the future by focusing on key verticals and using Unisys existing intellectual property.
“The energy industries we serve are highly competitive, and Unisys services give us an edge,” said Tim Hostman, vice president of end-user services at Flowserve, a Unisys customer. “Through its comprehensive service management and innovative analytics capabilities, Unisys gets the right services to the right people in the right way so they stay consistently productive while delivering predictable cost efficiencies that enable us to make key IT investments for our future.”
In order to deliver highly differentiated, solutions to clients’ most pressing and complex problems, Unisys moved to realign and invest in vertical industries, initially focusing on three verticals. These are the government sector, which includes both the U.S. federal group and the public group in Unisys Enterprise Solutions, representing 44 percent of Unisys revenue; the commercial sector, which represents 35 percent of Unisys revenue, and the financial services sector with 21 percent of revenue.
Software is Key; Security is Paramount
Altabef also quickly realized that software is a big part of what Unisys does.
“Every company needs to look for distinctiveness,” he said. “For us, even though the majority of our revenue is from IT services, the way we deliver those services and what we deliver is increasingly focused on software-led services. So we just don’t want to be a typical, generic IT services company. So the fact is we have this amazing wealth of software – 25 percent of the world’s airline reservations are done on our systems. We believe we have the largest data warehouse built on Oracle. These are really impressively developed software implementations. We’re using software to really drive the company.”
Within that software expertise, it is the company’s prowess in security that stands out. Unisys is known for its ClearPath Forward architecture and super-secure operating system. The company’s latest splash in the security space is its Stealth technology. The National Institute of Standards and Technology (NIST) ranked Unisys’ ClearPath OS 2200 and Unisys’ ClearPath MCP as two of the most secure operating systems on the market. Unisys software uses identity-based micro-segmentation techniques and encryption to protect data and applications. Stealth protection makes data and applications invisible to hackers and unauthorized users by encrypting traffic between all Stealth-protected endpoints. Companies and governments have been long advised to ‘segment’ their networks, so that an attack on one segment can’t affect the rest of the network.
“So we have this legacy of really strong security,” Altabef said. “We’ve been able to take that legacy of security and build it not into a proprietary operating system, but in Stealth a security package that goes into any operating system and in any environment. That’s pretty powerful stuff.”
“Unisys’ focus on security and knowledge of critical infrastructure related industries were important factors in our decision to become a client,” said Richard A. Loew, CIO of PBF Energy. “They are a company with a long tradition of innovation that continues to this day.”
Unisys Takes ‘Stealth’ Approach to Comeback Trail
In January, Unisys announced it was providing enterprises with its Unisys Stealth micro-segmentation security solution on the Amazon Web Services (AWS) Cloud, available for customers to acquire and deploy from the AWS Marketplace.
“AWS is all in with our recent work with Unisys on Stealth for AWS, and how Unisys is making it easy for government and enterprise customers to try and buy cloud solutions with the Stealth test drive and their range of offerings in the AWS Marketplace,” said Max Peterson, general manager of partners, capture and contracts at AWS Worldwide Public Sector. “Their focus on security, the cloud, and advanced data analytics illustrates a readiness to help their customers efficiently and effectively take advantage of the latest innovations in technology.”
Altabef calls this big news for Unisys because he said he believes one of the biggest challenges of IT services companies – as well as many companies in general – is how to deal with the phenomenon of the public cloud and sensitive data.
“So a major emphasis of ours is to develop a powerful solution that is at the intersection of security and cloud,” Altabef said, noting that Stealth is a pure software play which does not require an appliance and thus can be migrated to work seamlessly on public cloud platforms.
“AWS was the big announcement recently. But we actually can take clients’ workloads that are in their data centers or our data centers and expand those workloads seamlessly into AWS’ public cloud,” he said.
“We can continue to have VM to VM encryption, continue to have a cloaking environment where bad guys can try to ping servers and they will find nothing but air and space. And we have a remarkable nano-micro-segmentation approach to security. So anything that adds that level of security to a cloud environment is a disruptor in a sense that it’s a way to actually get our work into the public cloud and our clients’ work into the public cloud on an enterprise basis in a very powerful, secure way.”
So, while Unisys is placing a heightened emphasis on security, and Stealth represents cutting-edge innovation, the company has a long-established track record of providing advanced security solutions to governments and companies worldwide.
“We had to choose where we were going to double down. And one of those choices was security,” Altabef said. “And we have massively increased our investments in our security products over the last year. That culminated recently in the announcement around Stealth.”
Altabef also told eWEEK Unisys has created a mobile version of Stealth. “It’s early days, but there is not a technology reason why we cannot see a future where Stealth type capabilities are included in mobile handsets, for instance,” he said.
Competition and Legacy
Meanwhile, part of any comeback story is the capability to claim some market share from the competition. Altabef said in the technology space, IBM appears to be Unisys’ most frequent head-to-head competitor. Yet, on services it’s a diverse field, including Accenture, IBM, Wipro, Infosys, TCS, CSC, and HPE.
For his part, Altabef is all about managing Unisys and setting it up for growth and longevity. The company has been here for years and his mark would be to play a part in extending that history. Asked what he would hope his legacy at Unisys would be, Altabef said: “I’m not somebody who is trying to create a legacy. I’m there trying to make this company better every single day. But it is important to me that this company that is so meaningful in the history of technology and the history of computing becomes top of mind again. I think a lot of people understand the Unisys trademark, a lot of people think highly of that trademark, but not a lot of people know exactly what we do. And I think if people understand that Unisys is this leading provider of technology solutions and software with this core specialty around security, that’s got to be pretty good stuff. And I think the company would be very proud that it establishes that kind of re-imagining of what has been a very powerful name and presence in the business.”