Electronic Data Systems

Type	Division of HP
Founded	Incorporated June 27, 1962 as Electronic Data Systems
Founder(s)	H. Ross Perot
Headquarters	Plano, Texas, USA
Key people	Joe Eazor, Senior Vice President
Industry	Information technology services
Products	Computer Services
Revenue	$22.1 billion USD (2007)
Employees	136,000
Parent	Hewlett-Packard
Website	eds.com

HP Enterprise Services, is a global business and technology services company, previously known as Electronic Data Systems (EDS), headquartered in Plano, Texas that defined the outsourcing business when it was established in 1962 by Ross Perot. General Motors acquired the company in 1984, spun it off again as an independent company in 1996, and became an EDS client.

On May 13, 2008, Hewlett-Packard Co. confirmed that it had reached a deal with Electronic Data Systems to acquire the company for $13.9 Billion.^[1] The deal was completed on August 26, 2008. EDS became an HP business unit and was renamed EDS, an HP company. Ronald A. Rittenmeyer remained at the helm, reporting to Ann Livermore until his retirement.

As of 23 September 2009, EDS began going to market as HP Enterprise Services, a name change which came one year after HP announced the acquisition of EDS and was a critical milestone as the integration of EDS into HP neared completion. ^[2]

As of 2008, EDS employed 139,000 employees in 64 countries, the largest locations being the USA, India and the UK. It was ranked as one of the largest service companies on the Fortune 500 list with around 2,000 clients.

Contents 1 Company structure 1.1 Recent acquisitions 1.2 Revenue sources 1.3 Locations 1.4 Company sponsorships 2 Services 2.1 Partners 3 Major clients 4 Client Contract Controversies 5 Employee Salary Cut Controversies 6 References 7 External links

[edit] Company structure

In 2006, EDS sold their management consulting subsidiary company, A.T. Kearney, in a management buyout and retained interests in five^{[citation needed]} related companies:

• ExcellerateHRO, which offers human resources outsourcing services jointly owned by Towers Perrin
• Injazat Data Systems, which is a joint venture between EDS and Mubadala Development Company of Abu Dhabi. Its purpose is to provide IT and business process outsourcing (BPO) services in the United Arab Emirates, Qatar and Oman to the government, oil and gas, utilities, financial services, transportation, telecom and healthcare sectors
• SOLCORP, which provides software solutions and consulting services for the life insurance and wealth management industry
• EDS Consumer Loan Services (a.k.a. Wendover), which supports consumer loans in the United States
• MphasiS, an HP Company, operating from Bangalore, India, is a leading applications development and business processing and infrastructure outsourcing company. MphasiS was merged with then EDS India Unit to become MphasiS, an HP Company with a total strength of 33000+ employees. MphasiS operates as an independent HP subsidiary with its own board and continues to be listed on Indian markets as MphasiS Limited.

[edit] Recent acquisitions

(List of earlier acquisitions: HP and EDS Acquisitions and Divestitures.)

In May 2008, HP and EDS announced that they had signed a definitive agreement under which HP would purchase EDS at a price of $25.00 per share, or an enterprise value of approximately $13.9 billion. The terms of the transaction were unanimously approved by the HP and EDS boards of directors. The transaction closed on 26 August 2008. The companies' collective services businesses, as of the end of each company's 2007 fiscal year, had annual revenues of more than $38 billion and 210,000 employees, doing business in more than 80 countries.

In November 2007, EDS announced that it had agreed to purchase an approximate 93 percent equity interest in Saber Corp., a leading provider of software and services to U.S. state governments, from various sellers, including majority shareholder Accel-KKR, for approximately $420 million in cash. Saber became Saber Government Solutions after merging with other EDS state and local non-healthcare groups. In January 2009, it rebranded as EDS, an HP company.

In March 2007, EDS acquired RelQ Ltd, a testing company based in Bangalore, India.

In June 2006, EDS acquired a majority holding in MphasiS, a leading applications and business process outsourcing (BPO) services company based in Bangalore, India.

In April 2008, EDS acquired Vistorm Holdings Limited, a provider of information assurance and managed security services based in the U.K. The acquisition will create one of the largest information assurance and managed security services firms in Europe.^{[citation needed]}

In September 2009, HP purchased Lecroix Systems and incorporated it into the infrastructure of EDS to facilitate both in-house and client network security needs.

[edit] Revenue sources

For 2006, $9.6 billion of revenue came from the Americas (Canada, Latin America, and the United States); $6.4 billion from Europe, Middle East, and Africa; $1.5 billion from Asia-Pacific;^{[citation needed]} Services' revenue was: Infrastructure $12 billion, Applications Software $5.9 billion, Business Process Outsourcing $3 billion and all other $421 million.

EDS recently announced the expansion of its SAP consulting practice. "By collaborating with SAP on client engagement training and techniques that will drive the long-term growth of its consulting practice, EDS will further enhance its existing SAP capabilities and bring end-to-end SAP consulting and systems integration to the market by early 2008. Additionally, EDS will work closely with SAP's Global Partner and Ecosystem Group for market penetration and value-added customer offerings."

[edit] Locations

EDS operates in 48 countries,^[3] centered in the metropolitan areas of Dallas-Fort Worth; Detroit; Des Moines and Clarion, Iowa; Salt Lake City; Indianapolis; Winchester, Kentucky; Tulsa, Oklahoma; Boise, Idaho; and Northern Virginia in the United States. Other major facilities are in Argentina, India, Brazil, Mexico, Canada, Egypt, Germany, the United Kingdom, Australia, New Zealand, Hungary, Spain, Israel, South Africa and Italy.

EDS's Plano, Texas campus is located about 20 miles (30 km) north of downtown Dallas ( 33°04′27″N 96°48′33″W / 33.0742°N 96.8093°W / 33.0742; -96.8093 ("EDS Plano Campus) ). The campus consists of 3,521,000 square feet (327,000 m²) of office and data center space on 270 acres (1.1 km²) of land. It is the center of the 2,665 acre (11 km²) Legacy in Plano^[4] real estate development, which EDS built.

[edit] Company sponsorships

EDS was the title sponsor of the PGA Tour's EDS Byron Nelson Championship from 2003 to 2008, played in nearby Irving, Texas. In 2009, it became the HP Byron Nelson Championship. The tournament raises about $6 million dollars each year for youth and family service centers in Dallas.

EDS signed a sponsorship agreement in 2007 with Nobel Media to become a Global Sponsor of the Nobel Prize Series, and with Nobel Web to become its Global Technology Services Partner. The three-year agreement enables EDS to apply its technology expertise for the benefit of the Nobel Prize Series and the organization's Web technologies, including supporting the development of content on nobelprize.org, Nobel's award-winning website.

[edit] Services

EDS catalogs its services into three service portfolios which are Infrastructure, Applications and Business Process Outsourcing.^[5] Infrastructure services includes maintaining the operation of part or all of a client's computer and communications infrastructure, such as networks, mainframes, "midrange" and Web servers, desktops and laptops, and printers. Applications services involves the developing, integrating, and/or maintaining of applications software for clients. Business process outsourcing includes performing a business function for a client, like payroll, call centers, insurance claims processing, and so forth.

[edit] Partners

EDS establishes a number of business alliances^[6] with other companies through its global alliance program. The company has three types of alliances: Agility Alliances, Solution Alliances and Technology Alliances.

The EDS Agility Alliance has worked on a range of projects, notably its Agile Enterprise^[7] architecture, EDS' next-generation global delivery system which EDS claims^{[citation needed]} will be both cheaper to operate and more adaptable to business change. Members of the EDS Agility Alliance include Cisco Systems, EMC Corporation, Microsoft, Oracle Corporation, SAP, Sun Microsystems, Symantec and Xerox.

[edit] Major clients

Most of EDS's clients are very large companies and governments that need services from a company of EDS's scale. EDS's largest clients include Rolls-Royce plc, General Motors, Bank of America, Arcandor, Kraft, United States Navy, the UK Ministry of Defence and the Royal Dutch Shell.

EDS formed the National Heritage Insurance Company in 1996. The creation of this subsidiary is to manage Medicare Part B services on behalf of the Centers for Medicare and Medicaid Services (CMS), formerly the Health Care Financing Administration (HCFA). NHIC handles call center, claims processing and payment, fraud investigations, physician enrollment etc. in many states of the US.

Another large EDS client is the United States Navy. In 2000, they won a contract for the creation of a US$9 billion intranet linking the Navy and the Marine Corps, which was set to late 2006, but on March 24, 2006 was extended to 2010, adding $3 billion to the accumulated contract worth. This initiative is known as the Navy Marine Corps Intranet, or simply NMCI. In 2004, NMCI accounted for about 4% of EDS's revenue. NMCI has been called the largest private network in the world, with approximately 400,000 "seats". EDS is providing the network, desktops, laptops, servers, telephones, video-conferencing, satellite transceivers, and overall management of the intranet.^[8]

Following on to the NMCI type of services, EDS in March 2005 won a US$4 billion contract with the UK Ministry of Defence^[9] to "consolidate numerous existing information networks into a single next-generation infrastructure.... The network will provide seamless interaction between headquarters, battlefield support and the front line, linking about 150,000 desktop terminals and 340,000 users in approximately 2,000 locations...."

In February 2008 EDS signed a US$1.3 billion contract with the Infocomm Development Authority of Singapore, one of the largest IT projects ever undertaken in Asia. This agreement will help the Singapore government achieve a standard desktop, network and messaging/collaboration environment across its public sector by the end of fiscal year 2010.^[10]

In October 2008, the U.S. Defense Information Systems Agency (DISA) signed a US$111 million contract with EDS. Under this contract, EDS will: conduct worldwide security reviews, deliver certification and accreditation support, provide independent evaluation of United States Department of Defense security policies, and conduct security assessments on DOD operating systems, applications, databases, and networks. DOD and EDS have had a 13-year relationship of providing DISA with a wide range of infrastructure services, hardware and software through the DISA I-Assure and Encore contract vehicles.^[11]

Of historical significance, just prior to the overthrow of the Shah of Iran, EDS was the IT company that developed the Iranian social security information system. During the 1979 overthrow, several EDS employees were detained by the transitioning government of Iran, causing H. Ross Perot to undertake extraordinary clandestine measures to get these employees out of Iran.^[12] These events were recounted in Ken Follett's book On Wings of Eagles.

[edit] Client Contract Controversies

• In November 2001, a £300 million PFI (Private Finance Initiative) project to supply the UK's Ministry of Defence with a payroll system encountered serious problems which threatened to stop the pay of over 30,000 personnel. EDS could not deliver the system and was allegedly rescued by a government bailout.^[13]
• In December 2003, EDS lost a 10-year £3 billion contract to run the UK Inland Revenue IT services after a series of serious delays in the payment of tax credits, the contract instead being awarded to the company Cap Gemini. EDS had operated systems for the Inland Revenue since 1994 but the performance of its system had been low, causing late arrival of tax credit payments for hundreds of thousands of people.^[14][15]
• In 2004, EDS was criticised by the UK's National Audit Office for its work on IT systems for the UK's CSA (Child Support Agency) which ran seriously over budget causing problems which led to the resignation of the CSA's head, Doug Smith on 2004-11-27. The system's rollout had been two years late and following its introduction in March 2003 the CSA was obliged to write off £1 billion in claims, while £750 million in child support payments from absent parents remained uncollected. An internal EDS memo was leaked that admitted that the CSA's system was "badly designed, badly tested and badly implemented". UK MPs described it as an "appalling waste of public money" and called for it to be scrapped.^[16]
• In 2006, EDS' Joint Personnel Administration (JPA) system for the RAF led to thousands of personnel not receiving correct pay due to "processing errors". EDS and MoD staff were reported to have "no definitive explanations for the errors".^[17][18]
• In September 2007 EDS paid $500,000 to settle an action by the US Securities and Exchange Commission regarding charges related to overstatement of its contract revenues in 2001–2003. At the time these caused a fall in share prices in 2002 which led to legal action against EDS from US shareholder groups.^[19][20]
• On 2007-10-16, British TV company BSkyB claimed £709m compensation from EDS, claiming that EDS' failure to meet its agreed service standards resulted not just from incompetence, but from fraud and deceit in the way it pitched for the contract.^[20]
• On 2008-02-04, Her Majesty's Revenue and Customs is still waiting for compensation from EDS after settlement on failed delivery of IT services.^[21]
• On 2008-10-10 it was reported that a Ministry of Defence hard drive potentially containing the details of 100,000 Armed Forces personnel could not be located by EDS.^[22]

[edit] Employee Salary Cut Controversies

• On 2009-02-19, HP announced an across-the-board pay cut for all employees starting March 16. Mark Hurd, CEO, will take a 20% cut to his base pay, the Executive Council will take 15%, Managers 10%, Salary Employees 5%, and Hourly Employees 2.5%. The employee base was made aware of this policy change via a corporatewide quarterly earnings statement email. Many employees are incensed by this policy change and how it was delivered. Many believe Mark Hurd's 20% cut to be disingenuous as his $1.45 million base pay, affected by the 20% cut, is only a small percentage of the $42.5 million he made in fiscal year 2008.^[23][24]
• On 2009-03-13, US- and Puerto Rico-based EDS employees were informed their salaries would be cut another 10% during the April 2009 pay periods, albeit with no reduction to drop a salary below $40,000 a year. This cut is in addition to the 5% announced on February 19 and was limited to EDS employees, rather than all of HP. There has been no explanation of why only EDS employees are being singled-out for this pay cut (either to the press or via the internal announcement). This additional pay cut was also announced via email, delivered at 5pm EDT on a Friday afternoon and signed: "Sincerely, the EDS Senior Leadership Team." Economic reasons were cited as the overall cause and that "While we have no plans for an additional base-salary reduction, we will continue to closely monitor the performance of our business and make further adjustments as required in the coming months." The announcement indicated pay would be restored to the February 19 pay-cut levels (10% for management, 5% for salary employees, 2.5% for hourly workers) in May 2009.

^[25][26][27]

• In July 2009, it was announced that HP would be making further "salary adjustments" to their acquired EDS staff, to bring EDS salaries in line with HP salaries. In almost all cases, affected employees were informed that their salaries would be reduced, sometimes 30% or more, within the next 1–2 years. These adjustments would be permanent in nature. HP has confirmed the cuts, indicating that 20% of the workforce would be affected.^[28][29]

• On August 13, 2009, the Dallas NBC affiliate reported that EDS Employees were being threatened in a town hall meeting not to talk to the media about the salary cuts. These statements, made by Andy Mattes, the senior vice president of EDS Americas, were quoted from a podcast of the town hall and broadcast in the news report. "People have been leaking stuff into the news," Mattes said. "I can only urge you to keep the conversation that we're having here amongst ourselves. The more we can keep it amongst ourselves, the more open we can talk. If we have to get the feeling that everything that we do will show up in the newspapers tomorrow, you'll get whitewashed statements." However, employees interviewed for the report said they feel information is already being whitewashed for themselves, as well as customers and potential clients. They said the warning against speaking to the news media is intended to keep issues of morale and the potential impact on customers quiet. HP spokesmen offered no comment on Mattes' statements in the podcast.^[30]

[edit] References

[edit] External links

• Electronic Data Systems (official website)
• EDS Timeline (year-by-year history of EDS)
• EDS Acquisitions (unofficial list of EDS and HP acquisitions)