Global IT Consulting Report, May 2002. ©Copyright Kennedy Information, Inc., 800-531-0007. All Rights Reserved. Reproduction prohibited by law.
7
EDS regroups to take market share
(continued from page 6)
arm reported a greater-than-expected
15% decline in Q1 revenues.
EDS officials deny that ATK is in
danger of being spun off or sold. How-
ever, ATK’s relationship within EDS
will likely become more strained because
it is the only business line that has no
outsourcing component. It is the only
unit that has consistently lost money
under Brown’s reinvigorated EDS.
ATK’s revenues for 2001 slid to $1.2
billion. Since purchasing ATK in 1995,
its revenues have increased 10.8%
CAGR, compared to a 15.3% CAGR
for the management consulting industry.
Under the new business model,
BPO services will be housed within the
new operations solutions division.
Viewed as an area of tremendous
growth potential for EDS, BPO will
get better support, especially from
EDS’ revitalized and increased sales
staff. BPO accounted for $3 billion, or
about 14% of the firm’s revenue.
These gains will have to be made
without John McCain, who boosted E
Solutions revenues 38% to $1.2 billion
in 2001. EDS officials say McCain has
left to accept an offer with another
firm, although weeks after his depar-
ture he still had not re-emerged.
It appears that McCain doesn’t fit
into the reworked EDS, where con-
sulting services will apparently be
heavily influenced by apps develop-
ment and management.
The new consulting business unit
will be a $7 billion organization, of
which only $1.2 billion comes from
the E Solutions consulting division
McCain headed. The practice will be
headed by Paulett Eberhart, who pre-
viously led the North American out-
sourcing practice. Eberhart previously
reported to the head of the outsourc-
ing practice; she’ll now report directly
to the CEO.
FRANKFURT, Germany – EDS’
timing couldn’t be better. In the past
year, it has become a major player in
Germany and is primed to take advan-
tage of the expected rebound in the local
IT market.
The acquisition of Hamburg-based
Systematics AG doubled EDS’ rev-
enue in Europe’s top IT market. Gold-
man Sachs estimates that EDS’ sales
pipeline in Europe already has dou-
bled compared to a year ago, though
several large outsourcing contracts re-
main unsigned.
And the news should get better. For-
rester Research projects that the IT serv-
ices and consulting market will return to
double-digit growth by next year.
“During the 1990s, EDS in Germany
was largely asleep, especially when it
came to IT consulting and project im-
plementation,” said Christophe Chalons
of the German IT-services market re-
search firm PAC. “Its focus was almost
entirely on outsourcing among big Ger-
man multinationals. It also had a con-
fusing and overlapping internal organi-
zational division between i-Solutions for
outsourcing, e-Solutions for ERP solu-
tions, and BPM, which had been very
small.”
The integration of Systematics and a
global reorganization of the firm have
positioned EDS to take full advantage
of the expected growth in the German
economy. EDS CEO Dick Brown
wants revenue to grow 13%-16% in
Germany this year.
