At sunrise this morning the sun set on EDS. Electronic Data Systems, founded back in 1962 by Ross Perot, ceased to exist earlier today when it became HP Enterprise Services. Martyn Warwick reports.
EDS goes after the twelve month-long period of migration and assimilation that followed the acquisition of the Plano, Texas-headquartered company by HP. Since then the emphasis has been on bringing about the transformation of EDS to focus on the business unit's global role as the enterprise technology services arm of the extensive HP portfolio.
In a statement, David Gee, the VP of Worldwide Marketing at HP Enterprise Services says,"Thanks in large part to EDS, services is now the biggest segment of HP’s business, and our new name emphasises our growing stature in HP’s portfolio. HP Enterprise Services is helping to position HP as the leader in the IT services industry – a key driver in the future success of the world’s largest technology company."
Under Perot's quirky and authoritarian leadership EDS sprang from nowhere to found the information technology outsourcing industry - a new departure and industry whereby specialised companies help corporate clients and government agencies to manage their IT departments.
Perot also had many and deep links with the US military and intelligence communities. This was best exemplified and demonstrated in the 1980's when two EDS staff were kidnapped in Iran and handed over to Revolutionary Guards.
After talks to get them released failed, Perot hired an former-Green Beret of his acquaintance to run a rescue mission using mercenaries as well as some existing EDS staff. Operation Hotfoot (Help Our Two Friends Out Of Tehran) actually worked. The pair ecaped from jail (probably with the assistance of bribed guards - but no-one'd tellling) and were then smuggled across the border into Turkey and thence home.
Exciting though this was, EDS had a chequered history overall. Between 1962 and the mid-1980s it was pretty much the personal fiefdom of Ross Perot, the ex-IBM salesman who, with a personal fortune estimated to be around the six billion bucks mark, is officially is now the 72nd richest man in America. Mr. Perot became rather better known outside his native Texas after twice running as an independent candidate for President of the USA in 1992 and 1996.
In 1984 EDS was acquired by General Motors. GM kept it until 1996 when it was spun-out and an independent entity with GM itself becoming the first of a raft of major international customers.
HP announced that it was in negotiations to buy EDS in May last year and the acquisition was completed in August 2008 for US$13.9 billion.
David Gee says the name change and re-branding has taken place "because that's what clients wanted." He adds, "I've talked to probably more than 100 clients personally about what our options are: Do we keep the EDS name? Do we sunset it? Here are some alternatives that we could name the business going forward. "Universally, what the client community told us is that 'we want you to show up as HP.' That was across the board."
Last year EDS had 139,000 employees in 64 countries around the world and ranked as one of the biggest service companies in the Fortune 500 listing with some 2,000 plus clients. As it was subsumed into HP some 25,000 jobs were lost and salaries were cut to bring things into line with the strategies and norms of the new owners.
However, this morning, HP is emphasising that today's change is not the harbinger of further redundancies or wage reductions. David Gee says, "Nothing operationally changes between yesterday and today. In fact the most visible changes are at the EDS campus in Plano where EDS logos, flags, signs and other paraphenalia were swapped out overnight for the new HP Enterprise Services identifiers."
David Gee says that henceforth HP Enterprise Services will rely on innovation and differentiation to drive profitable growth.The aim is "to help our clients be more productive, innovative and secure – so they can grow or, in the case of government, more efficiently deliver their services to citizens. We will do this through technology delivered as a service – global and mobile, location-independent, device-independent, scalable and accessible."
He adds, “Rather than talking to our clients about technology, we talk to them about what it can do. We talk to them about outcomes – like faster production lines, more bookings, simplified communication, enhanced business performance and increased sales. The focus is on the end results – delivered exactly the way our clients need them: as a service.”
There's a lot riding on the success of this strategy. The purchase and assimilation of EDS by HP has been a majorand costly undertaking and HP recently revealed that its enterprise business arm accounts for 47 per cent of revenue and 60 per cent of group operating profit.
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