EDS develops business transformation services

After a rough year of layoffs, lawsuits and lacklustre revenue, Electronic Data Systems officials say the worse is behind them,...

After a rough year of layoffs, lawsuits and lacklustre revenue, Electronic Data Systems officials say the worse is behind them, and will expand the company's offerings with business transformation services led by a management team made up of ex-chief information officers.

Chief executive officer Mike Jordan, who took that job last March, is spearheading the move. He has filled his upper management ranks with executives to liaise with IT managers.

The 135,000-employee company sees future growth in helping companies exploit and integrate existing systems and transform their business processes, instead of simply operating systems for clients.

By offering customers services to transform IT operations, EDS will also challenge firms such as IBM or Hewlett-Packard that have detailed similar approaches.

EDS officials said the company's strengths will be an emphasis on open standards, depth of technical expertise and a relatively agnostic approach to technology. The company claimed to offer businesses "anything IBM can do".

"We're a little easier to work with and, we think, from a long-term perspective, a better technical solution," said Jordan.

The EDS team put together by Jordan includes Charlie Feld, a former CIO of Frito-Lay, Steve Schuckenbrock, who aworked for the Feld Group and was a senior vice president of IT at PepsiCo, and now is EDS executive vice president for global sales and client solutions; and David Clementz, a former CIO and president of ChevronTexaco Information, who is now an EDS executive vice president for service delivery.

EDS intends to develop deeper relationships with a smaller number of technology suppliers and have more of a "bias" toward certain products in their customer recommendations.

"By tightening alliances with the Suns and Dells ... we're trying to get a much better look ... into what's coming three or five years down the road," said Schuckenbrock.

Microsoft was another company EDS officials said they want a deeper relationship with.

EDS will build customer-centric models that are "made out of reusable parts", said Feld. For instance, one customer may use PeopleSoft and another SAP, but the business intelligence layer andwWeb front can be similar for both ERP systems.

"They've taken a real important step in presenting a vision, in how they are going to address customer needs - and they hadn't done this before," said IDC analyst Traci Gere.

"No one is delivering on this to any degree beyond a few exploratory customer relationships. Certainly EDS is a little bit late to the game, but the game is just beginning."

"I think they are trying to rationalize their broad range of offerings," said Gartner analyst John McCarthy. "Everybody is coming out of this slowdown in IT trying to figure out, 'How do we reinvigorate ourselves? What's our value proposition?'

"As the business is starting to recover, people are looking at making investments, and EDS is no different."  

EDS customer Joyce Phillips, the executive vice president of human resources at the Canadian Imperial Bank of Commerce (CBIC), a Toronto-based financial services firm with some nine million customers, said she found the new direction reassuring. She said the company offered "much more clarity as to where we fit as a BPO in their strategic direction".

CBIC has outsourced its human resources to EDS.

EDS has previously announced plans to lay off 5,200 employees, or about 4% of its workforce. Yesterday officials yesterday said they would cut costs by 24% over the several years, in part by pursuing a "Best Shore" offshoring strategy. Its latest quarterly earnings are due next week.

In its third quarter, EDS last October posted a net loss of $600,000, while revenue rose 6% to $5.24bn.

The company is also facing a class-action shareholder lawsuit, which alleges that two former top executives knowingly misrepresented company earnings and the health of the multibillion-dollar Navy/Marine Corps intranet contract. Company officials declined to discuss the contract.

Patrick Thibodeau writes for Computerworld

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