Electronic Data Systems

Electronic Data Systems (EDS)

File:EDS Logo.svg Logo used from 2000 until acquisition by Hewlett-Packard in 2008
Company type	Subsidiary (formerly publicly traded)
Industry	Information technology equipment and services
Founded	1962 (1962)
Founder	Ross Perot
Defunct	August 26, 2008 (2008-08-26)
Fate	Acquired by Hewlett-Packard
Headquarters	Plano, Texas , United States
Area served	Worldwide (66 countries)
Key people	Ross Perot (founder), Morton H. Meyerson (former president), Ronald A. Rittenmeyer (final CEO)
Products	IT equipment and services, outsourcing, consulting
Number of employees	300,000 (approximate, 2008) (2008)
Parent	Hewlett-Packard (from 2008)

Electronic Data Systems (EDS) Corporation was a prominent American multinational enterprise specializing in information technology equipment and services, headquartered in Plano, Texas. Established in 1962 by Ross Perot, the company operated as a subsidiary of General Motors from 1984 until it was spun off in 1996. In 2008, EDS was acquired by Hewlett-Packard.

History

H. Ross Perot, formerly an IBM salesperson, founded EDS with a focus on enhancing the inefficient utilization of IBM systems. One of its initial achievements involved streamlining computer time allocation between Southwestern Life Insurance and Collins Radio, both located in Dallas, Texas. EDS was a pioneer in facilities management, effectively acting as the IT department for its clients and providing support for early Medicaid and Medicare initiatives in Texas. Morton H. Meyerson joined the company in 1966 as the 54th employee and introduced the outsourcing business model in 1967, which significantly accelerated EDS’s expansion.

Throughout the 1970s, EDS broadened its services to include insurance and credit union sectors, surpassing $100 million in revenue by 1975 and initiating operations internationally. By 1978, the company had ventured into financial services, implementing automated teller machines, electronic funds transfer systems, and real-time point-of-sale terminals. When Meyerson assumed the presidency in 1979, EDS generated $270 million in revenue, carried no debt, and employed approximately 8,000 staff members.

In the 1980s, EDS expanded into travel payment solutions for airlines through the Air Transport Association of America and secured substantial contracts with the United States military. In January 1981, it acquired Centurion Computer Corporation, a small business minicomputer manufacturer founded in 1972.

General Motors acquisition

In 1984, General Motors purchased EDS for $2.5 billion, making it a wholly owned subsidiary. Meyerson continued as president, and by 1985 EDS operated across 21 countries with a workforce of 40,000 employees. After increasing revenue to $4 billion and expanding staff to 45,000, Meyerson retired in 1987. By the end of that decade, annual revenues had grown to $5 billion.

Regained independence

EDS regained its independence when GM spun it off in 1996.

During the 1990s, EDS expanded its presence within telecommunications and international IT markets. The company delivered systems for major global sporting events such as the 1992 Barcelona Olympics and 1998 FIFA World Cup. In 1994, EDS secured what was then the largest IT contract ever awarded—a $3.2 billion deal with Xerox—and acquired Databank Systems of New Zealand. The following year saw the purchase of A.T. Kearney, then ranked as the fourth largest private management consulting firm. After relisting on the New York Stock Exchange in 1996, EDS undertook over 1,300 projects addressing the Y2K challenge.

As part of its post-independence rebranding efforts, EDS involved employees in designing a new logo; Shawn Downs’ concept was ultimately chosen and introduced in 2000.

In conjunction with unveiling its new logo that year, EDS launched an acclaimed Super Bowl commercial themed around herding cats. Following this period, EDS continued to secure multi-billion-dollar contracts with major clients including Bank of America, American Airlines, General Motors itself, Kraft Foods, and the United States Navy. In 2006, it divested A.T. Kearney through a management buyout.

Hewlett-Packard acquisition, HP Enterprise Services, and merger with Computer Sciences Corporation

In May 2008, Hewlett-Packard Co. declared its intention to acquire EDS for $13.9 billion, a transaction finalized on August 26, 2008. Following the acquisition, EDS was incorporated as a division within HP and temporarily operated under the name "EDS, an HP company," with CEO Ronald A. Rittenmeyer reporting directly to HP CEO Mark Hurd until Rittenmeyer’s retirement later that year.

By 2008, EDS had a workforce of approximately 300,000 employees spread across 64 countries, with major hubs in the United States, India, and the United Kingdom. The company served nearly 2,000 clients and was recognized as one of the largest service providers on the Fortune 500 list.

EDS underwent a rebranding in September 2009, adopting the name HP Enterprise Services as part of its deeper integration into Hewlett-Packard.

On April 3, 2017, Hewlett Packard Enterprise Services combined with Computer Sciences Corporation to create DXC Technology, maintaining substantial operations in Plano, Texas, and preserving many core elements of EDS. Subsequently, on June 1, 2018, DXC spun off its U.S. public sector services through a Reverse Morris Trust, merging this segment with Vencore and KeyPoint Government Solutions to establish the publicly traded government contractor Perspecta Inc..

Company structure

In 2006, EDS divested its management consulting arm A.T. Kearney via a management buyout but continued to hold stakes in five affiliated enterprises:

• ExcellerateHRO – a human resources outsourcing firm co-owned with Towers Perrin
• Injazat Data Systems – a joint venture with Mubadala Development Company, delivering IT and business process outsourcing services throughout the UAE, Qatar, and Oman across industries such as government and oil and gas
• SOLCORP – specializing in software solutions and consulting for life insurance and wealth management sectors
• EDS Consumer Loan Services (Wendover) – providing support for U.S. consumer loan portfolios
• MphasiS – an applications development and outsourcing company headquartered in Bangalore; merged with EDS India operations but functioned as an independent subsidiary publicly traded in India with roughly 33,000 employees

Acquisitions

In June 2006, EDS secured a controlling interest in MphasiS, a prominent Bangalore-based applications and business process outsourcing (BPO) firm.

March 2007 saw EDS acquire RelQ Ltd, a testing services provider also based in Bangalore.

In November 2007, EDS agreed to purchase about 93% ownership of Saber Corporation—one of the leading software and service suppliers to U.S. state governments—for approximately $420 million in cash. Saber was subsequently merged with other EDS state and local government non-healthcare units to form Saber Government Solutions before being rebranded as EDS, an HP company in January 2009.

April 2008 marked the acquisition of Vistorm Holdings Limited by EDS; this UK-based firm specialized in information assurance and managed security services, positioning EDS as one of Europe’s largest competitors in that domain.

In May 2008, HP announced its plan to acquire EDS at $25 per share, valuing the deal near $13.9 billion. The transaction closed on August 26, 2008. Combined revenues for their service divisions exceeded $38 billion (as of 2007), supported by a global workforce of around 210,000 employees operating across more than 80 countries.

Following this, in September 2009 HP acquired Lecroix Systems and integrated it into EDS to strengthen network security offerings for both internal functions and customer solutions.

Revenue streams

In 2006, EDS reported revenues of $9.6 billion from the Americas region, encompassing Canada, Latin America, and the United States. Europe, the Middle East, and Africa contributed $6.4 billion, while Asia-Pacific accounted for $1.5 billion. The company’s service income was segmented into Infrastructure services ($12 billion), Applications Software ($5.9 billion), Business Process Outsourcing ($3 billion), and additional services totaling $421 million.

To bolster its SAP consulting capabilities, EDS partnered with SAP to develop client engagement training programs aimed at fostering sustained growth. This collaboration sought to strengthen EDS’s SAP expertise and provide comprehensive SAP consulting and systems integration solutions by early 2008, emphasizing enhanced market reach and delivering greater customer value via SAP's Global Partner and Ecosystem Group.

Geographic presence

EDS maintained operations in 66 countries worldwide, with significant employee hubs located in cities such as Detroit, Dallas-Fort Worth, São Paulo, Washington, D.C., Toronto, Rome, Milan, Paris, Adelaide, Philadelphia, Sydney, Blackpool, Sacramento, Tyneside, Madrid, Barcelona, Lisbon, Antwerp, and Frankfurt. Additional important sites were spread across Argentina, Australia, Belgium, Brazil, Canada, Egypt, Germany, Hungary, India, Ireland, Israel, Italy, Mexico, the Netherlands, New Zealand, South Africa, Spain, and the United Kingdom.

The company inaugurated its Plano headquarters campus in 1992 featuring two eight-story office buildings connected by an elevated walkway. This campus spans 270 acres and offers 3.5 million square feet of combined office and data center facilities. It includes four Tier-IV data centers alongside a command center, clustered office spaces, a fitness facility, a service station, four helipads, and an aircraft hangar. This site serves as the cornerstone of the 2,665-acre Legacy development in Plano initiated by EDS.

Sponsorship activities

Between 1998 and 2001, EDS served as the sponsor for Derby County Football Club in the Premier League and held secondary sponsorship roles during the 1994 and 1998 FIFA World Cup tournaments.

From 2003 through 2008, EDS was the title sponsor of the Byron Nelson Championship on the PGA Tour held in Irving, Texas. This event contributed roughly $6 million annually to youth and family service organizations in Dallas. In 2009 the tournament was renamed the HP Byron Nelson Championship.

In 2007 EDS entered into a three-year agreement to become a Global Sponsor and Technology Services Partner for the Nobel Prize Series. This partnership aimed to improve web technology infrastructure and enrich content on nobelprize.org.

EDS also supported Jaguar Racing in Formula One and acted as title sponsor for the 1995 Australian Grand Prix.

Service offerings

EDS structured its portfolio into three primary categories: Infrastructure services; Applications services; and Business Process Outsourcing (BPO). Infrastructure services involved managing client IT systems such as networks, mainframes, midrange platforms, web servers, desktops/laptops, and printers. The Applications segment focused on software development projects including integration and ongoing maintenance. BPO covered outsourcing business operations like payroll administration, call center management, and insurance claim processing on behalf of clients.

Strategic partnerships

Through its global alliance initiative, EDS formed multiple Business alliances classified into Agility Alliances, Solution Alliances, and Technology Alliances.

The Agility Alliance program included collaborations on initiatives such as the Agile Enterprise project with partners like Cisco Systems, EMC Corporation, Microsoft, Oracle Corporation, SAP, Sun Microsystems, Symantec, and Xerox.

Major clients

EDS predominantly catered to large-scale enterprises and government agencies that demanded comprehensive IT solutions. Among its prominent clientele were Rolls-Royce plc, General Motors, Bank of America, Arcandor, Kraft, the United States Navy, the UK Ministry of Defence, and Royal Dutch Shell. It is worth noting that General Motors intended to bring 90% of its IT operations in-house between 2012 and 2017.

In 1996, EDS established the National Heritage Insurance Company to oversee Medicare Part B services for the Centers for Medicare and Medicaid Services (CMS). This included managing claims processing, conducting fraud investigations, enrolling physicians, and operating call centers across various U.S. states.

A significant engagement was with the United States Navy through the US$9 billion Navy Marine Corps Intranet (NMCI) contract awarded in 2000 and extended in 2006 through 2010 with an additional $3 billion. Representing roughly 4% of EDS’s revenue by 2004, NMCI ranks among the largest private networks worldwide, supporting about 400,000 users via network infrastructure and management services.

In March 2005, EDS secured a US$4 billion deal with the UK Ministry of Defence to integrate multiple networks into a single Defence Information Infrastructure, connecting 340,000 users across 2,000 sites.

By February 2008, EDS had been awarded a US$1.3 billion contract from Singapore’s Infocomm Development Authority aimed at unifying desktop, network, and collaboration platforms throughout the public sector by the end of fiscal year 2010.

In October 2008, EDS entered into a US$111 million agreement with the U.S. Defense Information Systems Agency (DISA) to conduct security evaluations, certification assistance, policy reviews, and security assessments on Department of Defense systems. This contract extended a longstanding partnership spanning 13 years that delivered infrastructure services through DISA I-Assure and Encore agreements.

Historically, before the Iranian Revolution, EDS developed Iran’s social security information system. During the revolution’s turmoil, several EDS personnel were detained; founder H. Ross Perot personally orchestrated their release—an episode chronicled in Ken Follett’s On Wings of Eagles.

Client contract controversies

• In December 2003, EDS lost a decade-long £3 billion contract to manage Inland Revenue IT services following significant delays in processing tax credit payments. The contract was subsequently awarded to Capgemini. Although EDS had managed Inland Revenue systems since 1994, performance issues led to late payments affecting hundreds of thousands.
• The UK's National Audit Office criticized EDS in 2004 for budget overruns on IT systems developed for the Child Support Agency (CSA). The project was delayed by two years, resulting in CSA writing off £1 billion in claims while £750 million in child support remained unpaid. An internal memo from EDS admitted the system was "badly designed, badly tested and badly implemented". Members of Parliament described it as an "appalling waste of public money".
• In 2006, EDS' Joint Personnel Administration (JPA) system deployed for the RAF generated widespread payroll inaccuracies with no clear explanations forthcoming from either EDS or Ministry of Defence personnel.
• In September 2007, EDS agreed to pay $500,000 to settle allegations brought by the U.S. Securities and Exchange Commission concerning inflated contract revenues reported between 2001 and 2003. These accusations had triggered declines in share price and shareholder litigation.
• On October 16, 2007, British broadcaster BSkyB initiated a claim seeking £709 million in damages from EDS for alleged incompetence as well as fraud and deceit in securing their contract.
• During litigation involving BSkyB, it emerged that an EDS Managing Director possessed an internet-obtained degree of dubious legitimacy. Evidence suggested even a dog might have earned a higher grade. Hewlett-Packard was ordered to pay a preliminary £200 million pending appeal regarding the full £700 million claim.
• On October 10, 2008, reports surfaced that a hard drive managed by EDS containing potentially sensitive information on approximately 100,000 Armed Forces personnel was missing under their oversight at the Ministry of Defence.

See also

In 1997, EDS achieved its most significant IT agreement at that time by securing a contract with the Commonwealth Bank of Australia, valued at approximately US$3.7 billion (around AU$5 billion based on the exchange rate then).

External links

• "Electronic Data Systems" article in the Handbook of Texas Online by the Texas State Historical Association