Champagne corks popped almost endlessly at EDS when it was announced in early February that it had won a giant systems integration contract from General Motors. The euphoria was so great over the deal, worth $3.8 billion over five years, that EDS even stationed two GM luxury cars at the entrance to its sleek headquarters building in Plano, TX, to symbolize its pride in winning the GM business.
The victory was the result of a two-year all-out effort by EDS to win the GM contract. And EDS had to do it the old-fashioned way -- it had to earn the business in competition with other firms. Now, that may seem normal for any company, but it isn't for EDS. Industry history buffs will remember that in 1984 GM acquired EDS and made the professional services firm its in-house IT services provider. EDS became independent again in 1996 and that same year signed a 10-year master services agreement with GM that is due to expire in June.
But the looming end of the contract posed a major challenge for EDS. Could it retain a major portion of the GM business when for the first time it had to compete against the likes of IBM, Hewlett-Packard, and Capgemini? Led by VP Jeff Kelly, EDS did just that. It won nearly 65% of what GM put out to bid.
At an analyst meeting I attended a week later in Plano, EDS executives and employees were still in full strut over the GM "recompete" win. But the GM deal, while important now, is not the real story of what is happening at EDS. And it may not point to what lies ahead for EDS either.
The reason is that EDS has been undergoing a top-to-bottom transformation as an IT services provider competing in an increasingly global business. Three years ago, EDS hit the proverbial wall. In March of 2003, a new CEO, Michael Jordan, the retired chairman and CEO of CBS, was hired and the transformation of EDS began.
Since that time, Jordan and his team have stabilized EDS and started the process of fixing many of the company's product-based, organizational, and cultural problems. Initiatives such as developing an agile enterprise, becoming more cost competitive in its product offerings, and becoming more customer-centric were put into place.
Now, Jordan told the analyst group, EDS is poised to grow, and grow profitability. "The turnaround, per se, is complete," Jordan said. "A few years ago, EDS was a bit of a basket case. Now, we're a solid and respectable company. But who wants to be solid and respectable? Our goal is to get back to a leadership position."
Convinced that outsourcing is a long-term trend, EDS intends to recapture that leadership position by focusing on customers, profitable growth, flawless execution, and clear internal accountability. "EDS got itself so complicated in the way it did business," Jordan said. "That's been the curse of this place."
As it strives for leadership, EDS will no doubt point to the GM win as evidence of its worthiness. But its future does not lie with GM. It will be found instead in the company's key goals as well as in emerging geographic markets. The challenge for EDS will be to leverage the GM legacy without resting on it.
What's your view on business transformation? Write to me at Dbrousell@thomaspublishing.com.