David Melcher: “a good acquisition is one that complements your core capabilities”

David Melcher: "a good acquisition is one that complements your core capabilities" - top government contractors - best government contracting event
David Melcher
David Melcher
David Melcher

Recently, ExecutiveBiz had the opportunity to sit down with David Melcher of ITT Defense & Information Solutions. He spoke about the impact ITT has on the average customer, what makes a good acquisition and lessons learned from reorganization.

ExecutiveBiz: Tell us about ITT Defense?

David Melcher:  ITT Defense & Information Solutions is a Top-10 U.S. defense contractor providing innovative technologies and operational services to meet the emerging requirements of military, government and commercial customers around the world. At over $6.3 Billion of annual revenues, we specialize in electronic systems, communications, electronic warfare, night vision, EO and IR sensors, and space-borne and airborne intelligence, surveillance and reconnaissance systems.  We are also the provider of the nation's Next Generation Air Traffic Management system for the Federal Aviation Administration. The preponderance of our business is defense, but we also do work for other agencies like the FAA, NASA, NRO and Homeland Security in the areas of electronic, network and intelligence solutions. Although the core of ITT is electronic services, we do have an extremely diversified portfolio and we stand by our products as being “Engineered for Life.”

I believe that it is a very fragmented market and we have to work hard to understand how people define cybersecurity, since every agency has their own characterization of it. -David Melcher

ExecutiveBiz:  What is your current role and how many people does ITT have employed in the DC area?

David Melcher:  I became the President of ITT Defense in December 2008, following 32 years in the United States Army.  On January 5, 2010, we became ITT Defense and Information Solutions, which is the name we selected to describe our business following a major transformation of into 3 Value centers named Electronic Systems, Geospatial Systems and Information Systems.  We are one of two business groups that comprise ITT Corporation, which is an $11 B business comprising both defense and commercial endeavors.  Our business segment has about 21,000 employees overall, with several thousand employees working in the DC area in a variety of business and support centers.

ExecutiveBiz:  How big is ITT in cybersecurity?

David Melcher:  Information and Cyber security is one of our areas of focus and growth, and we provide a variety of information technologies that enable secure computing networks, such as information assurance, intelligence sharing and computer network defense.

ExecutiveBiz:  If you look at the cybersecurity landscape there is a civil liberties aspect and there is public private partnership ““ what is your view of what is going on in the government as it relates to cybersecurity?

David Melcher:  I believe that it is a very fragmented market and we have to work hard to understand how people define cybersecurity, since every agency has their own characterization of it.  I think we have to come to terms with the fact that both government and businesses are increasingly being targeted in an attempt to gain access of and control of information.  At ITT, we protect ourselves with our own cyber capabilities and market those capabilities to other federal customers.  Our aim is to help Federal agencies find better integrated solutions to their information sharing and security needs.

ExecutiveBiz:  Before we started our interview we talked about the way ITT impacts the average consumer in ways that people might not know about.  Could you give a couple of examples of that?

David Melcher: ITT is a company that affects people's lives in many different ways from geo-location to satellite imagery to weather tracking.  When you use the GPS in your automobile, the signal comes from an ITT payload in space.  When you click on imagery online, it is most likely from an ITT camera in space, and we also produce the weather sounders that enable our nightly forecasts.  ITT Defense also influences service men and women's lives in all the services through capabilities we provide in communications, night vision, jamming and electronic warfare, the service contracts that support them in theater, and the radars that are on our ships.  The work that we do at the FAA is going to affect every American utilizing our national airways because they will have the benefit of a GPS-based location system on the aircraft they're flying in, which will make for less delays and more controlled ascent and descent in flight patterns that result in fuel savings and reduced carbon emissions over time.  I think there is a very positive, long-term benefit to the work that we are doing.

ExecutiveBiz:  A topic a lot of CEOs have mentioned to me is insourcing.  Has insourcing impacted your business?

David Melcher:  We have a certain amount of contract work called SETA (Systems Engineering and Technical Analysis) that we do for various government customers.  Some of that work is now being insourced, which I welcome because I think inherently governmental work should to be done by governmental employees.  I have no problem with withdrawing contract support from government offices that make decisions about programs.  We have worked that into our business analysis on where we go in the future.  I think it's a welcome change.

ExecutiveBiz:  Can you talk about lessons learned from your reorganization that might be helpful for other people looking at large change.

David Melcher: First of all, if you are going to reorganize, do it based upon what your customer base needs.  This was the primary driver in our decision to reorganize our businesses.  Secondly, if you are going to consolidate businesses, move quickly and organize them in a way that maximizes the potential of your units.  We brought together the best of our capabilities, which has allowed us to economize our cost structure, making us more competitive and able to provide better services, capabilities and products to the customer.  To me, that is a win-win situation for ITT.

ExecutiveBiz:  What makes a good acquisition?

David Melcher:  In my opinion, a good acquisition is one that complements your core capabilities, yet allows you to move into new growth areas in which you might lack expertise or customer relationships. The same thing will be true of air traffic management and information and cyber security, which are two areas we will be looking at to try and bolster our existing capabilities.

ExecutiveBiz:  What is something that most people don't know about you personally?

David Melcher:  I love music and used to play the trumpet when I was younger, but I also have a family that is musically oriented. Our oldest daughter Meredith served in the Army and is now performing in a commercial group of military veterans called “4TROOPS,“ which is signed under contract with Sony to produce a record album, a portion of the profits of which will go to Veterans groups.  Our younger daughter Katie is a 1st Lieutenant in the Army and she is performing this year in the Army Soldier Show. My family and I are very proud of the fact that they continue to perform and have found ways to incorporate their love of music into what they do for a living.

ExecutiveBiz:  Is there anything else that you would like to add?

David Melcher:  The defense business is an interesting and challenging environment to be in.  Earlier, you asked about what I learned in transitioning from the Army that is applicable to business.  The Army is just as much about leadership as it is anything else, and it trains people to be leaders of organizations of all sizes, to care for people, and to focus on the mission.  In Corporate America, that need is no different and since my transition to ITT, I naturally try to develop our leaders and look for the right kind of leadership to have within our businesses and the various functional supporting arms of the company. The people that tend to be good leaders really know how to care for the people they lead, as well as inspire them to do the things that need to be done for the benefit of the company.  To that extent, a military background can be a big benefit when you come to Corporate America.

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