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Meet Australia’s biggest niche IT services player

Meet Australia’s biggest niche IT services player

How Leidos Australia became a 1000-person government IT services contractor from a starting base of just 60 employees within two years

Christine Zeitz - Leidos Australia’s managing director and senior vice president

Christine Zeitz - Leidos Australia’s managing director and senior vice president

The multibillion-dollar merger between Leidos and Lockheed Martin’s government IT services business in 2016 saw Leidos Australia grow almost overnight from a 60-strong tech player to a firm with almost 800 people under its belt.

The merger saw the local Leidos brand instantly become one of the largest prime systems integrators servicing Australia’s federal public sector market.

Since then, the company’s Australian operation has carved out what seems to be a relatively extreme niche for itself, with a strategic focus on just a small handful of major Federal Government entities, including the Department of Defence and the Australian Taxation Office (ATO).

This laser-focused attention on such a narrow sliver of the local market sees the company largely eschew the private sector, state government and, indeed, much of the smaller Federal Government entities. The strategy has transformed Leidos Australia into perhaps the biggest niche player in the local market.

While relying on such an exclusive portion of the broader domestic market might seem risky, it is precisely how Leidos Australia’s managing director and senior vice president, Christine Zeitz, likes it.

“Our strategy is to keep our core market as federal agencies,” Zeitz old ARN. “When I first came in, we actually retracted. We came out of Asia, and we stopped bidding for state governments. And we just completely focused on federal agencies.”

Zeitz was appointed as Lockheed Martin’s vice president and managing director in Australia and Asia Pacific. Just weeks before she was set to begin her new role, the company told her of its plans to sell its Information Systems & Global Solutions (IS&GS) business segment.

Mega-merger

Ultimately, Lockheed Martin entered into a so-called Reverse Morris Trust transaction – similar to a spin-merger, which sees both companies spin out standalone businesses for the purposes of merging – with Leidos that was worth an estimated US$4.6 billion.

On 16 August 2016, well into Zeitz’s first year tenure with Lockheed Martin, the company announced it had completed the separation of its IS&GS business segment and merged it with a subsidiary of Leidos Holdings named Abacus Innovations, effectively closing the merger.

The move saw Leidos mop up the remainder of the $800 million agreement Lockheed Martin signed with the Department of Defence in late 2014 to supply centralised processing services for its Chief Information Officer Group (CIOG) until 2022.

At a global level, the merger represented the coming together of two roughly equal parts to create a new whole. In Australia, however, the move saw Lockheed Martin’s 700-strong workforce folded into Leidos Australia, which at the time claimed roughly 60 people.

While the combined entity’s local operation was heavy with Lockheed Martin personnel, Zeitz herself claims that she “never really became a Lockheed person” as the business unit had, by the time she stepped into her role, been segregated from the rest of the company for its proposed sale.

“So I started managing the business without a corporate owner,” Zeitz said.

Regardless of the uncertainty surrounding the sale process, Zeitz set to work, laying out a new strategy by December 2015.

This saw the company eventually pull back from its work in Asia and wind up its state government activity in Australia.

Now, Zeitz claims that Leidos Australia is the largest commercial supplier to the Australian intelligence community while also maintaining its ongoing relationship with the Department of Defence’s CIOG.

This is no small task, given that the CIOG oversees more than 6,000 servers, three primary data centres, and over 100,000 workstations.

Read more on the next page...


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Tags governmentlockheed martinDepartment of Human ServicesLeidos Australia

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