EDS: Signs of Recovery

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    eWeek columnist Stan Gibson does an awesome job of describing EDS’ efforts to return to greatness in his Jan. 23, 2006 cover article, “EDS, New and Improved.”


    According to Gibson, CEO Michael Jordan has “dusted off” an oil portrait of a young Ross Perot and hung it as a symbolic gesture in the executive office area at EDS’ headquarters.


    Among the signs of turnaround:



    • A 10-year contract with United Airlines for desktop user work.

    • A 5-year, $500 million contract with Royal Ahold, a European-based grocery chain.

    • A renegotiated contract with the Marine Corps for its long-failing intranet project, which is finally in the black on an annual basis for EDS (though will never recoup the massive losses EDS has suffered).

    • A 10-year, possibly $7.6 billion contract with the UK Ministry of Defence.

    In other words, earnings are up.


    The article didn’t mention the failures EDS is facing with Blue Shield of California, which is pulling away from outsourcing through EDS and choosing to rebuild its internal IT services, as Sourcingmag.com reported earlier this week.


    The article by Gibson puts a lot of emphasis on EDS’ Agility Alliance, a partnership of top-name tech and service companies (Cisco, Microsoft, Oracle, et al) that supply the underpinnings of EDS’ service offerings. (To provide services on equipment outside of the partnership requires sign-off from Jordan himself, according to the story.) He concludes, “Some partners could go off in their own directions.”


    Well, that’s already happening. Each of the partners has its own services or consulting offerings. But with the exception of Towers Perrin, an HR and financial services provider, each partner has a vested interest in its own tech direction. Taking on EDS prospective client by prospective client might provide wider negotiating room on specific solutions, but won’t bring the broad range of integration and daily support those clients expect from a full-fledged service provider.


    The bigger danger for EDS will be the growing presence of Wipro and Infosys in Corporate America’s project management offices.


    As the competition heats up, perhaps it will become an acquisition target. Maybe HP should dump its rumored pursuit of CSC and look at EDS instead. Seems like a closer cultural fit, if you ask me. The only obstacle to that: HP may have already had its fill of Texas purchases.


     

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