While the company has won accolades for its continuous growth, it has reached a crossroads in its business. SAIC’s business model is changing. As it focuses on doubling revenues over the next 5 years—to become a $10 billion to $12 billion company—aggressively growing its private sector business has become a priority. SAIC has built a strong business in the government sector (more than 60 percent of its revenue comes from federal, state and local governments), but has not been as successful on the commercial side of IT services where it competes with IBM, EDS, Accenture and HP/Compaq.

For the second quarter of 2003, the company reported its revenues from government customers increased 12 percent over the same period last year. Its commercial business declined because customers in the telecommunications and energy sectors (SAIC’s leading vertical commercial market targets) reduced their contract spending.

Despite overall slowed IT spending and acute commercial market weakness, SAIC remains committed to expanding its business in this area. We analyze in this report the strengths that will help and the challenges that could hinder SAIC.



Table of contents:

1. Strategies
2. Strengths
   • Financial Viability
   • Applications Development and Systems Integration
3. Challenges
   • Partnering
   • Building Brand and Name Recognition
   • Developing Sales Channels
4. Recommendations
5. Further Reading