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Electronic Data Systems

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This article is about the original Electronic Data Systems. For the successor corporate entity, seeDXC Technology.

Electronic Data Systems (EDS)
Company typeDivision
NYSE:EDS
IndustryInformation technologyservices
FoundedJune 27, 1962
as Electronic Data Systems
FounderRoss Perot
Defunct
  • August 26, 2008 (acquired)
  • September 23, 2009 (brand retired)
FateAcquired byHewlett-Packardlater branded as HP Enterprise Services merged withComputer Sciences Corporation
SuccessorCSC rebranded asDXC Technology(since 2017)
Headquarters
Plano, Texas
,
USA
Area served
Worldwide
ServicesComputer Services
RevenueUS$22.1 billion (2007)
Number of employees
136,000
Parent
Websitewww.eds

Electronic Data Systems(EDS) was an Americanmultinationalinformation technology equipment and services company headquartered inPlano, Texas,which was founded in 1962 byRoss Perot.The company was a subsidiary ofGeneral Motorsfrom 1984 until it was spun off in 1996. EDS was acquired byHewlett-Packardin 2008.

History[edit]

Electronic Data Systems (EDS) was founded in 1962 byH. Ross Perot,a graduate of theUnited States Naval Academyand a successfulIBMsalesman who first-hand observed how inefficiently IBM's customers typically were using their expensive systems. Somewhat to IBM's chagrin, since the company wanted to sell as many computers as possible, Perot made a fortune changing this. An early success was in matching the unused computer time at Southwestern Life Insurance Company with the computing needs of rapidly expandingCollins Radio,both located in Dallas, Texas. Perot knew the inside details of both companies.[1]

In its early years, EDS was a pioneer infacilities management– becoming the IT department for many companies – as well as beginning to service banks and provide early support for bothMedicaidandMedicarein its home state of Texas.[2]Leading the effort internally wasMorton H. Meyerson,who joined the company in 1966 as the company's 54th employee. In 1967, he proposed the business model that eventually became known as "outsourcing"[3]and which led to exponential growth for EDS.

In the 1970s, EDS expanded initially into more insurance services and latercredit unions,and by 1975 revenue topped $100 million (~$440 million in 2023) and the company began bidding for work internationally. In 1978 EDS expanded into financial markets with the arrival ofautomated teller machines,electronic funds transferand real-time point-of-sale terminals. Meyerson was named president in 1979, at which point EDS had revenue of $270 million (~$914 million in 2023), was free of debt, and had 8,000 employees.

In the 1980s, they expanded into travel services supporting payment services between travel agents and airlines represented by theAir Transport Association of America,and provided large scale contracts for the US military.

In January 1981 EDS purchased Centurion Computer Corp, founded as Warrex Computer Corporation in 1972,[4]a manufacturer of small business minicomputers.[5]

General Motors acquisition[edit]

In 1984, the company was acquired byGeneral Motorsfor $2.5 billion (~$6.21 billion in 2023), with EDS becoming a wholly owned subsidiary of GM. Meyerson remained president and in 1985, the company had a presence in 21 countries with 40,000 employees. Meyerson retired in 1987. During his years of executive leadership, EDS revenue grew to $4 billion a year, and the company grew to 45,000 employees. By the end of the decade, revenue was $5 billion.

Regained independence[edit]

In 1996, GM spun off EDS as an independent company.[6]

In the 1990s, in addition to its existing markets, EDS was entering the telecommunications industry and was providing IT systems in many foreign countries. They were providing information systems for global sporting events including the1992 Barcelona Olympics,the1994 FIFA World Cup,and the1998 FIFA World Cup.In 1994, they signed what was at the time the largest information technology contract withXeroxfor $3.2 billion (~$5.97 billion in 2023) and also bought the New Zealand banking processing companyDatabank Systems.In 1995 they purchasedA.T. Kearney,the world's 4th largest privatemanagement consultingfirm. In 1996, they became an independent company again and relisted on theNew York Stock Exchange.Before the turn of the century they took part in over 1,300Year 2000projects. As a part of the move towards being an independent company, EDS asked its employees to assist in the re-branding effort by submitting designs for a new logo. While a design (a square with the "E" in it) was selected and used for several years, it was the design of Shawn Downs, an employee in the Charlotte IPC, that was ultimately selected and utilized in the 2000 launch.[citation needed]

In 2000, EDS launched a new logo with an award-winningSuper Bowlcommercial aboutherding cats.[7]Post-2000, they continued to sign long term, billion dollar contracts with organizations such asBank of America,American Airlines,General Motors,Kraft Foodsand theUnited States Navy.In 2006 they sold A.T. Kearney in a management buyout.

Hewlett-Packard acquisition, HP Enterprise Services and merger with Computer Sciences Corp[edit]

In May 2008,Hewlett-Packard Co.confirmed that it had reached a deal with EDS to acquire the company for $13.9 billion (~$19.3 billion in 2023).[8]The deal was completed on August 26, 2008. EDS became an HP business unit and was temporarily renamed "EDS, an HP company". Ronald A. Rittenmeyer, EDS Chairman, President, and CEO, remained at the helm and reported to HP CEOMark Hurduntil his retirement.[9]In December 2008, HP announced that Rittenmeyer would retire at the end of the month.[10]

As of 2008, EDS employed 300,000 people in 64 countries, the largest locations being the United States, India and the UK. It was ranked as one of the largestservicecompanies on theFortune 500list with around 2,000 clients.

In September 2009, EDS began going to market asHP Enterprise Services,a name change which came one year after HP announced the acquisition of EDS, and which was a critical milestone as the integration of EDS into HP neared completion.[11]

On April 3, 2017, Hewlett Packard Enterprise Services merged withComputer Sciences Corporationto formDXC Technology,retaining significant operations from Plano, Texas, and many aspects of EDS. On June 1, 2018, DXC spun off the U.S. public services sector of the business through aReverse Morris Trust,combining withVencoreand KeyPoint Government Solutions to create a new independent and publicly traded government contractor,Perspecta Inc.[citation needed]

Company structure[edit]

EDS headquarters in Plano, Texas
EDS in Tower 500 at theRenaissance Centerin Detroit, Michigan

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

  • ExcellerateHRO, which offershuman resourcesoutsourcing services jointly owned byTowers Perrin
  • Injazat Data Systems, which was a joint venture between EDS andMubadala Development CompanyofAbu 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 provided software and consulting services for the life insurance and wealth management industry
  • EDS Consumer Loan Services (Wendover[clarification needed]), which supports consumer loans in the United States
  • MphasiS,operating from Bangalore, India, is an applications development and business processing and infrastructure outsourcing company. MphasiS was merged with then EDS India Unit to become MphasiS, an HP Company with about 33,000 employees. MphasiS operated as an independent subsidiary with its own board and was listed on Indian markets as MphasiS Limited.

Acquisitions[edit]

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 March 2007, EDS acquired RelQ Ltd, a testing company based inBangalore, India.

In November 2007, EDS announced that it had agreed to purchase an approximate 93 percent equity interest inSabre Corporation,a leading provider of software and services to U.S. state governments, from various sellers, including majority shareholder Accel-KKR, for approximately $420 million (~$595 million in 2023) 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 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.

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 anenterprise valueof 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 (~$53.8 billion in 2023) and 210,000 employees, doing business in more than 80 countries.

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.

Revenue sources[edit]

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; Services' revenue was: Infrastructure $12 billion, Applications Software $5.9 billion, Business Process Outsourcing $3 billion and all other $421 million.

EDS announced the expansion of its SAP consulting practice:[12]

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.

Locations[edit]

EDS campus in Plano, Texas

EDS operated in 66 countries,[13]with the largest numbers of employees in the cities of Detroit, Michigan, United States; Dallas-Fort Worth, Texas, US; São Paulo, Brazil; Washington, D.C., US; Toronto, Ontario, Canada; Rome and Milan, Italy; Paris, France; Adelaide, Australia; Philadelphia, Pennsylvania, US; Sydney, Australia; Blackpool, UK; Sacramento, California, US; Tyneside, UK; Madrid and Barcelona, Spain; Lisbon, Portugal; Antwerp, Belgium and Frankfurt, Germany. Other major facilities were inArgentina,Australia,Belgium,Brazil,Canada,Egypt,Germany,Hungary,India,Dublin, Ireland,Israel,Italy,Mexico,Netherlands,New Zealand,South Africa,Spainand theUnited Kingdom.

In 1992 the Plano EDS Headquarters campus comprising two eight-story buildings connected by an upper level bridge of office space was opened. 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. The campus included fourTier-IVdata centers, a command center, four clusters of office buildings, a fitness center, a service station, four helipads and a hangar. It is the center of the 2,665 acre (11 km²) Legacy in Plano[14]real estate development, which EDS built.

Sponsorships[edit]

EDS sponsored thePremier Leagueassociation football teamDerby Countyfrom 1998 to 2001 and was also a second-tier sponsor at theFIFAWorld Cups in theU.S.A. 1994andFrance 1998.

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

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 onnobelprize.org,Nobel's award-winning website.

EDS sponsoredFormula OneteamJaguar Racingand was title sponsor of the1995 Australian Grand Prix.

Services[edit]

EDS cataloged its services into three service portfolios; Infrastructure, Applications, andBusiness Process Outsourcing.[15]Infrastructure services includes maintaining the operation of part or all of a client's computer and communications infrastructure, such asnetworks,mainframes,"midrange"andWeb servers,desktopsandLaptops,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.

Partners[edit]

EDS established a number ofBusiness alliances[16]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. Members of the EDS Agility Alliance includeCisco Systems,EMC Corporation,Microsoft,Oracle Corporation,SAP,Sun Microsystems,Symantec,andXerox.

Major clients[edit]

Most of EDS's clients were very large companies and governments that need services from a company of EDS's scale. EDS's largest clients includedRolls-Royce plc,General Motors,Bank of America,Arcandor,Kraft,United States Navy,theUK Ministry of DefenceandRoyal Dutch Shellalthough General Motors announced plans to move 90% of its IT work back in house over the next 3 to 5 years starting in 2012.[17]

EDS formed the National Heritage Insurance Company in 1996. The creation of this subsidiary is to manageMedicarePart B services on behalf of theCenters for Medicare and Medicaid Services(CMS), formerly theHealth 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 theUnited States Navy.In 2000, they won a contract for the creation of a US$9 billionIntranetlinking the Navy and theMarine 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 theNavy 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 provided the network, desktops, laptops, servers, telephones, video-conferencing, satellite transceivers, and overall management of the intranet.[18]

Following on to the NMCI type of services, EDS in March 2005 won a US$4 billion (~$6 billion in 2023) contract with the UK Ministry of Defence[19]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 (~$1.81 billion in 2023) 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.[20]

In October 2008, the U.S.Defense Information Systems Agency(DISA) signed a US$111 million (~$154 million in 2023) contract with EDS. Under this contract, EDS will: conduct worldwide security reviews, deliver certification and accreditation support, provide independent evaluation ofUnited States Department of Defensesecurity 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.[21]

Of historical significance, just prior to theoverthrowof theShah 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 extraordinaryclandestinemeasures to get these employees out of Iran.[22]These events were recounted inKen Follett's bookOn Wings of Eagles.

Client contract controversies[edit]

  • In December 2003, EDS lost a 10-year £3 billion contract to runInland RevenueIT services after a series of serious delays in the payment of tax credits, the contract instead being awarded to the companyCapgemini.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.[23][24]
  • In 2004, EDS was criticized by the UK'sNational Audit Officefor its work on IT systems for the UK'sChild Support Agency(CSA), 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.[25]
  • In 2006, EDS' Joint Personnel Administration (JPA) system for theRAFled 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".[26][27]
  • In September 2007 EDS paid $500,000 to settle an action by theU.S. Securities and Exchange Commissionregarding 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.[28][29]
  • On October 16, 2007, British TV companyBSkyBclaimed £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.[29]
  • During the BSkyB case, it was shown that a Managing Director had obtained a degree over the Internet. Lawyers for Sky were able to demonstrate that the process for awarding the degree claimed would give a degree to a dog, and that the mark attained by the dog was higher than that of the HP executive, who was questioned on his expertise and integrity. HP lost the case with a preliminary £200 million payment ordered, whilst they appeal over the £700 million total.[30]
  • On October 10, 2008, it was reported that aMinistry of Defencehard drive potentially containing the details of 100,000 Armed Forces personnel could not be located by EDS.[31]

See also[edit]

In 1997 EDS signed its largest IT contract to that date, with the Commonwealth Bank of Australia for US$3.7 billion (~$6.52 billion in 2023)[32](approx AU$5bn at the prevailing exchange rate).

References[edit]

  1. ^Yost, Jeffrey R. (2017).Making IT Work: A History of the Computer Services Industry.Cambridge, Massachusetts: The MIT Press.ISBN978-0-262-03672-6.OCLC978286108.
  2. ^"History: From EDS' first IT contract in 1962 / eds".Internet Archive Wayback Engine.2009. Archived fromthe originalon 31 March 2009.Retrieved8 April2015.EDS vaulted into the new century with a much celebrated Y2K rollover, performing more than 1,300 successful projects for clients around the world. As EDS celebrated its 40-year anniversary in 2002, the industry it created contributed more than $500 billion to the global economy – nearly half of the world's IT spending
  3. ^"IAOP Announces Outsourcing Hall of Fame Inductees".IAOP.org (The International Association of Outsourcing Professionals).8 January 2013.IAOP Announces... and Mort Meyerson have help shape...
  4. ^Centurion DataPro Reports, archived by Internet Archive
  5. ^https:// upi /Archives/1981/01/30/Electronic-Data-Systems-Corp-Friday-announced-the-purchase-of/5038349678800/
  6. ^McKesson, Mike (8 August 1995)."GM Plans to Spin Off EDS".The Washington Post.
  7. ^"EDS, an HP Company 'Cat Herders'".YouTube.EDS. 30 January 2000.Archivedfrom the original on 21 December 2021.Retrieved8 April2015.
  8. ^Paul, Franklin (13 May 2008)."HP to buy EDS for $12.6 bln in challenge to IBM".Reuters. p. 4. Archived fromthe originalon 18 May 2008.Retrieved13 May2008.
  9. ^"HP to Acquire EDS for $13.9 Billion".HP News. Archived fromthe originalon 2 March 2013.Retrieved24 April2014.
  10. ^"HP Adds EDS to its Technology Solutions Group to Better Serve Business and Public Sector Customers".HP News.Retrieved24 April2014.
  11. ^"EDS, an HP Company, Becoming HP Enterprise Services".Retrieved23 September2009.
  12. ^"DXC Technology: Global IT Services and Solutions Leader".DXC Technology.8 January 2021.Retrieved15 February2021.
  13. ^Locations,EDS Website
  14. ^Legacy in Plano
  15. ^Services,EDS Website
  16. ^"Alliances",EDS Website
  17. ^Kwang, Kevin."GM to hire 10K IT workers, cut outsourcing".ZDNet.
  18. ^"NMCI Overview",EDS Website
  19. ^EDS-Led Consortium Signs Contract With U.K. Ministry Of Defence For Defence Information Infrastructure Project,EDS Website
  20. ^"Singapore Government Announces a S$1.3 Billion SOEasy Program Award to EDS-led oneMeridian Consortium".Archived fromthe originalon 13 January 2009.Retrieved7 October2010.
  21. ^"EDS wins $111m DISA contract".tmcnet.
  22. ^Operation HOTFOOTArchived2007-02-20 at theWayback Machine,medicaid.state.ar.us
  23. ^"Inland Revenue dumps IT provider".BBC News.11 December 2003.Retrieved29 January2008.
  24. ^"EDS rallies troops over tax credits fiasco".The Register. 10 December 2003.Retrieved29 January2008.
  25. ^McCue, Andy (18 November 2004)."EDS under fire over £456m child support IT fiasco".Silicon. Archived fromthe originalon 13 January 2008.Retrieved29 January2008.
  26. ^"Payroll Alliance".LexisNexis.3 August 2006.Retrieved29 January2008.[permanent dead link]
  27. ^"EDS's RAF pay system struggles to take off".The Register. 9 May 2006.Retrieved29 January2008.
  28. ^Faragher, Jo."EDS under investigation for accounting practices".Information Age. Archived fromthe originalon 3 January 2013.Retrieved29 January2008.
  29. ^abShipman, Alan (17 October 2007)."Sky falls on EDS with biggest outsource compensation case".Finance Week. Archived fromthe originalon 17 October 2008.Retrieved29 January2008.
  30. ^"Key EDS witness bought internet degree".iTnews.
  31. ^"Our interview with MoD over EDS missing hard drive - Public Sector IT Projects".21 October 2010.Retrieved2 November2010.
  32. ^"Tech Bytes: $3.7B Outsourcing Deal for EDS in Australia | American Banker".14 August 1997. Archived fromthe originalon 8 December 2022.

External links[edit]

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