EDS drives into new markets

The US outsourcer is setting its sights on government contracts across Europe, writes Mike Simons

The US outsourcer is setting its sights on government contracts across Europe, writes Mike Simons

EDS, the Texas-based IT outsourcer, may have had a mauling from the markets, the press, and the House of Commons Public Accounts Committee (PAC) recently, but it is reshaped, remodelled and on the prowl again.

That was the message from John Meyer, the new president of EDS's European operations, when he spoke to Computer Weekly at IDC's European IT forum in Monaco last week.

"Outsourcing used to be about cheap data processing," said Meyer. "Saving 20% on 2% of someone's budget has no impact. Saving 20% on the other 98% of cost base has a big impact, and that is where we are going."

In the UK, EDS is best known for its domination of government outsourcing and Meyer praised Prime Minister Tony Blair's efforts to deliver joined-up government.

"Blair has created an environment in government that you typically only see in the commercial world, which is competition," said Meyer. "You see some ministries competing for funding to bring technology to bear to make improvements."

The choice is made on who can best manage the money and the programme, said Meyer, who then tried to put the Inland Revenue's problems with online self-assessment in this context.

"When the Prime Minister defined 'joined-up government' as providing 24x7 services, the first reaction of most ministries was to put in call centres. They will find call centres cannot be a long-term solution. Then they'll move to the Internet, but a lot of them don't want to be first movers.

"There are a few, like the Revenue, that want to be first movers, and they'll take some heat, because things don't always go well first time. They chose the solution [in online tax filing] that was ultimately best, but it had technology risk. It didn't come in perfectly, but it is getting there."

Meyer noted criticism from the PAC, but he insisted the key criterion is customer satisfaction, and he said EDS gets an overwhelmingly positive reaction from the government departments it works for. "The truest test of whether value is being created," said Meyer, "is whether the customer keeps buying, and we are continuing to win more contracts."

Meyer intends to use EDS's experience in the UK to pursue government outsourcing contracts across Europe where the market is less developed and he has a vision of a more nimble EDS, offering a broader range of services to more clients.

The company is going to focus on the communications industry and financial services and last week launched a range of ASP offerings for SMEs.

EDS will target communications companies with billing and clearing house services as well as offering system development. "They've got a lot of change in the marketplace and they've got a lot of money," said Meyer.

EDS will also target financial services, with innovative developments rather than bulk processing. Traditional targets for outsourcing are cheque processing, loan servicing and call centres, but Meyer said real value depends on bringing business knowledge and expertise into relationships. EDS has targeted niche financial services markets and aims to establish itself as a strategic middleman for a series of interconnected niche players.

The company will continue to focus on manufacturing, where it has long-term relationships with General Motors and has just had a £1.5bn contract renewed with Rolls Royce.

A key innovation will be EDS's charge into the ASP market. "We've always been known as elephant hunters," said Meyer. "We get big deals. Big deals give us critical mass. They give us people, networks and datacentres. Now we are going to deliver that capability in packaged solutions for SMEs."

Meyer said EDS would offer clearly defined services at competitive prices, rather than flexible products. "The only way to make these things work is to keep the pattern consistent," said Meyer. "You'll also see us team up with smaller suppliers, and we'll wholesale," he said.

Meyer's vision of whole-saling involves EDS customers selling on EDS services to their clients.

It is a law of the e-revolution that speed to market is the key to success. EDS is out to prove that a law valuable in the industrial revolution is equally applicable - force equals mass multiplied by acceleration. EDS has the mass and Meyer is confident of it accelerating quickly.

An example is the development of a storage-on-demand service with EMC. "We can provide storage on a per transaction basis, utilising their sales force and our product," Meyer said. "It's taken my 400 sales people and turned them into 1,400," he laughed.

Read more on IT for small and medium-sized enterprises (SME)

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