The Merger of Burroughs and Sperry

Group 8: Deepu / Mitali / Neha / Robin

Agenda

Then & Now

1886 - American Arithmometer Co. founded

1886 - American Arithmometer Co. founded

1905 – American Arithmometer renamed Burroughs Adding Machine Co.

1905 – American Arithmometer renamed Burroughs Adding Machine Co.

1910 – Sperry Gyroscope Co. founded to manufacture and sell navigational equipment.

1910 – Sperry Gyroscope Co. founded to manufacture and sell navigational equipment.

1923 – Burroughs introduces direct multiplication billing machine.

1923 – Burroughs introduces direct multiplication billing machine.

1925 – Burroughs introduces first portable adding machine, weighing 20 pounds. Remington Typewriter

introduces America's first electric typewriter.

1925 – Burroughs introduces first portable adding machine, weighing 20 pounds. Remington Typewriter

introduces America's first electric typewriter.

1927 – Remington Typewriter and Rand Kardex merge to form

Remington Rand.

1927 – Remington Typewriter and Rand Kardex merge to form

Remington Rand.

1933 – Sperry Corp. formed.1933 – Sperry Corp. formed.1949 – Remington Rand produces

409, the world’s first business computer.

1949 – Remington Rand produces 409, the world’s first business

computer.

1950 – Remington Rand acquires Eckert-Mauchly Computer Corp.1950 – Remington Rand acquires Eckert-Mauchly Computer Corp.

1951 – Remington Rand delivers UNIVAC computer to the U.S.

Census Bureau.

1951 – Remington Rand delivers UNIVAC computer to the U.S.

Census Bureau.

1953 – Burroughs introduces first 10-key adding machine. Remington Rand introduces

UNIVAC 1103

1953 – Burroughs introduces first 10-key adding machine. Remington Rand introduces

UNIVAC 1103

1955 – Sperry and Remington Rand merge to form Sperry Rand.

1955 – Sperry and Remington Rand merge to form Sperry Rand.

1961 – Burroughs introduces the B5000 Series, the first dual-processor

1961 – Burroughs introduces the B5000 Series, the first dual-processor

1976 – Sperry introduces first cache memory disk subsystem.

1976 – Sperry introduces first cache memory disk subsystem.

1980 – Burroughs golf scoring service first introduced at the 109th Open Championship

Muirfield, Scotland.

1980 – Burroughs golf scoring service first introduced at the 109th Open Championship

Muirfield, Scotland.

1984 – Burroughs introduces A Series, forerunner of the current ClearPath HMP

NX system.

1984 – Burroughs introduces A Series, forerunner of the current ClearPath HMP

NX system.

1986 – Sperry and Burroughs merge to form Unisys Corporation.

1986 – Sperry and Burroughs merge to form Unisys Corporation.

1989 – Unisys introduces Micro A, the first desktop

1989 – Unisys introduces Micro A, the first desktop

1992 – Unisys forms unit to deliver IT services.

1992 – Unisys forms unit to deliver IT services.

1994 – Services and solutions become the

company's single largest business.

1994 – Services and solutions become the

company's single largest business.

1997 – Unisys Windows NT servers lead industry in price/performance.

1997 – Unisys Windows NT servers lead industry in price/performance.2000 – Unisys begins shipping ES7000 servers 2000 – Unisys begins shipping ES7000 servers 2001 – Customers enter into long-term contracts

with Unisys2001 – Customers enter into long-term contracts

with Unisys

2004 – 3D Blueprinting is introduced

2004 – 3D Blueprinting is introduced2006 – Unisys develops its breakthrough

Unisys Security Index to provide a snapshot of consumers’ sense of security

in four areas

2006 – Unisys develops its breakthrough Unisys Security Index to provide a

snapshot of consumers’ sense of security in four areas

2007 – Unisys opens a data center with innovative “green”

design

2007 – Unisys opens a data center with innovative “green”

design

2008 – Unisys helps Beijing Airport prepare for the 2008

Olympic Games

2008 – Unisys helps Beijing Airport prepare for the 2008

Olympic Games

2009 – Unisys announces new, focused strategy building on the

company’s strengths in the growing markets of security,

data center transformation and outsourcing, end user

outsourcing and support services, and application

modernization.

2009 – Unisys announces new, focused strategy building on the

company’s strengths in the growing markets of security,

data center transformation and outsourcing, end user

outsourcing and support services, and application

modernization.

2010 - Unisys debuted secure partitioning (s-

Par®), a Unisys-developed virtualization technology for

Intel processor-based ClearPath servers.

2010 - Unisys debuted secure partitioning (s-

Par®), a Unisys-developed virtualization technology for

Intel processor-based ClearPath servers.

2011 – Unisys unveils Stealth Solution for Secure Virtual Terminal, a solution

residing on a federal government-certified USB device to protect mobile

users’ data and make it is readily available only to

those authorized to view it.

2011 – Unisys unveils Stealth Solution for Secure Virtual Terminal, a solution

residing on a federal government-certified USB device to protect mobile

users’ data and make it is readily available only to

those authorized to view it.

UNISYS

American global IT - United Information SystemsMerger of Burroughs & SperryPortfolio of IT services, software and technologyMore than 100 countries across the globeDrivers

Creativity Technical excel lance Tenacity Can do spirit

Burroughs

A $5 billion company (1986) – selling mainframe computers to non-defense markets

Highly CentralizedProducts of very high quality and high marginEmphasis on top fiscal oversightInstituted program management overseeing

every product through R&D, manufacturing & distribution

Management style was top down and apoliticalMarketing & Sales activities were organized

geographically (in functional structure) – Only the banking group had LOB structure

Burroughs

Service reps and sales –people dedicated to particular product lines

Burroughs was a highly progressive company, welcomed new ideas and new people

Company stressed on putting qualified people to appropriate jobs

Employees more business and fact oriented and loyal to their allocated budgets

Sperry

Delivered Univac, in 1951 – the first commercially available computer.

World leader in the large mainframe marketPrincipal customer was the federal government.Committed to becoming a supplier in complete

systems. Customizations as per customer requirements.

Organization structure was decentralized- All the business functions like R&D, operations and product development were given significant autonomy

Sperry

Hardware, software and Service personnel were assigned to LOBs – 7 LOBs before merger

Sales personnel were assigned business accounts and they had dedicated service personnel

Customized products – multiple projects – lot of delays

Engineers had high autonomy – their projects were expensive and intensive

Organization environment was more familial and political.

Intentions behind the Merger

Sperry’s mainframe customer base was worth $17 billion.

Overlap in customer base (with Burroughs’) was just 5%.

Sperry was also strong in the defense systemsJoin the forces of Burroughs’ business mind and

Sperry’s creativityRemain in the information system business for a

long termSell total solutions to the customersEconomies of scale

Initiatives take for smooth integration

Involving consultants to tackle the human element of the merger – sounding boards, morale auditors

Re-Branding the new entity Open to all members of the merged firm (Highly successful –

came up with the name UNYSIS – united information systems)Continuous and effective confidence building

communicationTemporary governing Body

Merger coordination council – gave leadership, managed each task force

Blumenthal’s trips to different facilities of Sperry and Burroughs to address customer’s apprehensions

Merger Principles

Partnership

No Winners, No Losers in this Merger. Maintained distinct computer lines

Meritocracy

Only the best qualified survived

Unity A new identity, a new name

Dispatch “ Delay lends fuel to uncertainty”

Merger Coordination Council (MCC)

5 executives from Burroughs & 3 from Sperry formed the MCC

Lead by the ChairmanMCC Objectives

Develop new organization Integrate marketing worldwide Review noncore businesses Consolidate operations Integrate products and technology Improve financial performance

Top 4 executives formed the EO EO acted as a unified management office

Task Force

12 task forces in totalTasks

Initial fact finding Recommendations Implementations

Logic People dedicated to the problem of building a new

company with new management “task oriented way” Staffed by a variety of people

Line of Business (LOB)

Moved from Geographical based business orientation to LOB based

Established 5 LOBs Airlines & Communications Public Sector Defense Industry Commercial

Fast-track the LOB process, increasing the overall costMake employees focus on a narrow business and be

more proficientLOBs gave Unisys a competitive edge over their

competitors

Cost savings

Eliminated duplicated services – raised $1.8 billion, retired much of their debts

Sold Sperry’s aerospace unit to Honeywell for $1.2 billion

Sold a part of Burroughs’s Memorex subsidiary to an investor group for $550 million

Closed many plants, negotiated lower-cost purchasing agreements

Consolidated R&DReduced staff by 12000Cut off of Sperry’s new product developments due to

perceived lack of demandShared technologies and investments in many areas

of specialization

Problems faced

Inefficient Distribution SystemsCouldn’t choose existing systems due to cultural

differencesUnrealistic deadline of a year didn’t allow for

proper implementationThey launched a new distribution system in 1987,

which was too early to come up with new system as per one of their executives.

They decided to run both distribution systems parallel until the new system could come into existence. They didn’t view the situation as sensitive to act immediately.

Integrating MIS system for the entire country

UNISYS Analysis

SCARF : Status

Burroughs' employees felt they were not being treated at par and their CEO was favoring Sperry

SCARF : Certainty

After the merger, even top employees from both companies were worried about job security

Sperry’s employees were skeptical about Blumenthal’s intentions

Even the MCC meetings were guarded, cautious and tense Each side was apprehensive as they were in direct

competition for jobs in the new firm

SCARF : Autonomy

In the new system, there was no autonomySystem was centralized and highly regulated

SCARF : Relatedness

Observable difference in work cultureSperry people were unable to relate to

Burroughs’ management Burroughs’ Management was too concerned with

money and short-term savings

Burroughs people found Sperry’s approach to be alien

Sperry’s approach was high value and quantity, but less efficient and profitable

A “We” and “They” mentality present

SCARF : Fairness

Blumenthal tried to be fair to the workforce People who were non-performers were laid off

irrespective of their designation or association

On the contrary, Blumenthal pushed people into blending with the merger

Pitfalls and opportunities-Merger scenario

[ http://www.executiveblueprints.com/tips/090524mergers.htm ]

Mergers and acquisitions typically do not double revenue or cut operating costs in half. However,

proper planning can introduce new ideas, talents, and customers into a very a very profitable mix. It

is a business evolution, not a quick fix.

UNISYS – A Case of Horizontal Merger

Seven Fundamental Tenets of successful Integration

Accelerate the transitionDefine the integration strategyFocus on priority initiativesPlan the integration and prepare for Day One

earlyCommunicate with all stakeholdersEstablish leadership at all levelsManage the integration as a business process

Source : http://www.pwc.com.au/consulting/assets/publications/Seven-Tenets-Mar11.pdf

Financial & Market Status

Unisys vs. IBM – 1990 to 1997

Financial decline over the years

Source : http://www.wiley.com/college/mar/kotabe372897/pdf/case20.pdf

SWOT

Strengths Weaknesses

Opportunities Threats

7 Dimensions of Culture

Leadership

Setting very high (sometimes) unachievable targets. Pushing the entire organization with you without developing a general consent. 7 month deadline to streamline the process 7 month deadline to achieve the $7-$9 return on shares Deliberate fast-tracking of all integration processes so that people

don’t have time to think over it Implementing all LOB’s together Obsessed with neutrality- the decision for a new distribution system

Retired from UNISYS in 1990. Collected $14.7 billion in compensation for the merger. Earns a pension of $500000.

Currently works for an investment banking house (in Paris) that is dismembering Unisys in an effort to save it

Source : http://articles.philly.com/1991-09-21/news/25803860_1_james-unruh-michael-blumenthal-unisys