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Unisys CEO Returns IT Firm To Profitability

edward-coleman-storythumb-68x68.jpgIn the fall of 2008, J. Edward Coleman became chairman and CEO of Unisys Corp., an information technology company with a rich history of innovation. Unisys’ antecedents rolled out the first commercial typewriter and adding machine and built ENIAC, the first large-scale, general-purpose, digital computer.

But by the time Coleman arrived, Unisys had lost its edge and had failed to post a profit for several years. Coleman led a successful turnaround of the company, which provides “mission critical” IT environments to businesses and governments around the globe, including those in the financial services, airlines and telecommunications industries.

“What allows a company to go from the ‘king of the hill’ to ‘run of the mill’ is that the basis of competition changes, but the business model doesn’t change with it,” Coleman told students at the Tepper School of Business in April when he appeared as part of the W.L. Mellon Speaker Series.

Coleman, who formerly served as CEO of Gateway Inc. and CompuCom and senior manager at IBM, is no stranger to rapid, technology-driven market change. Over the past 30 years, he’s seen Apple, IBM, Dell and HP emerge and battle for their share of the IT market pie.

To turn Unisys around, Coleman focused on its strengths -- security, data center transformation, in-user support and application modernization -- while maintaining or selling off less robust segments.

“We were trying to be too many things to too many people in too many places,” he said. “We spread ourselves too thin.”

Focus paid off. Since Coleman’s arrival, Unisys subsidiaries have secured contracts to develop biometric technology supporting Mexico’s national identification card program and provide systems integration for a new terminal at New Delhi’s Indira Gandhi International Airport.

Since 2009, Coleman has also slashed $250 million from Unisys’ cost of services delivery, which was five percent higher than that of competitors. He also streamlined the company’s overhead.

He inherited a “complicated and overbureaucratic matrix management system,” where each of the five units had its own senior management team, a holdover from the 1986 merger of the Sperry and Burroughs corporations that formed present-day Unisys.

“The first staff meeting, everyone descended,” Coleman said. “It was a nightmare. Management was arguing over whose numbers were right. If any thing was good, everyone was raising their hand. If something went wrong, people would say, ‘I did my part but that guy didn’t.’”

The company had been structured in the 1980s to compete with giants like IBM, a disconnect with reality for the mid-sized technology company, Coleman said. He trimmed $250 million in expenses by dismantling the outdated management structure.

Coleman stripped the budget of excesses large and small. He set a good example by grounding the company’s G4 jet and selling its helicopter, perks he felt were too extravagant for the executives of a midsized company.

Using a G4 was “acting like IBM when we were not,” he said.

The CEO also worked to infuse camaraderie and teamwork into Unisys’ operations.

“Turnaround is a team sport,” he said. “There is no time or opportunity for people to operate individual fiefdoms or to act like prima donnas.” Teamwork at Unisys is defined as “I will not let you fail,” a mantra managers repeat to one another in meetings.

Coleman also helped Unisys’ financials by reducing debt and selling off real estate.

In 2009, Unisys turned a profit for the first time in five years and ended 2010 with more cash than debt for the first time in decades.

“Profits are up. Cash is up. Customer service is up,” Coleman said. “The customer’s feeling about us has changed. It is very hard to sell a business contract when a customer is worried about whether you are going to be in business 12 months from now.
“It is so refreshing from two years ago, when our customers were asking about our problems at Unisys. Now we are talking about the clients and their problems.”
 


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