SAIC Splits into Two Companies for Efficiency, Focus

John Jumper, SAIC

Fortune 500 science, engineering and technology company, SAIC, has announced its decision to divide into two public companies following a strategic review.

The move will create two business units; a technical services unit for government and enterprise IT, and a larger science and technology unit focusing on national security, engineering and healthcare.

Founded in 1969 in La Jolla, Calif., by physicist J. Robert Beyster, SAIC built a reputation for fostering competition and independence among business units, which were able to pursue government contracts based on individual strengths.

But times have changed, 40 years and one move to northern Virginia later, former CEO Walter P. Havenstein authored a plan to unite the company into a more solid strategic unit.

Havenstein discussed the idea in an interview with the Washington Post last November, arguing that the government contract market favored larger programs, and that the small-but-versatile philosophy of SAIC’s past couldn’t compete as well for larger contract vehicles.

“Where some people would say we may have let go of our small, entrepreneurial nature, I would say what we’ve really done is helped transform ourselves to be able to punch our weight in the marketplace,” Havenstein told the paper.

With the company facing recent profit losses according to Forbes, the new strategy could signal a return to the company’s original approach.

SAIC said in a statement that separating the companies would eliminate “the potential and the perception of organizational conflicts of interest,” as well as create more efficiency, opportunities for employees and “a more focused and compelling view” for investors.

“In this next step of our strategic plan we configure ourselves for the future.  Our two new companies will be designed so that their businesses can be more differentiated and more competitive in their own space.  More importantly, that addressable space will expand for each as we eliminate the burden of organizational conflicts of interest (OCI),” Jumper added.

“This affords both companies an excellent opportunity to combine optimized cost structures, unrestricted access to their respective markets, and the leveraging of decades of SAIC’s scientific and engineering excellence to unleash the growth and value we can deliver to our customers, employees and shareholders.”

 

 

 

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