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Electronic Data Systems

Electronic Data Systems (EDS) is a global business and technology services company 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.

In 2006, EDS employed 117,000 people located in 58 countries and reported revenues of US$19.8 billion; by 2008, employment had risen to 137,124 employees in 65 countries, the largest locations being the USA, India and the UK. It is ranked as one of the largest service companies on the Fortune 500 list with around 2,000 clients.

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. The deal was completed on August 26, 2008. EDS was renamed EDS, an HP Company. Ronald A. Rittenmeyer remained at the helm, reporting to HP CEO Mark Hurd.

Company structure

In 2006, EDS sold their management consulting subsidiary company, A.T. Kearney, in a management buyout and retained interests in four 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 services for the life insurance and wealth management industries.
Wendover Financial Services, which supports consumer lending products.
MphasiS, operating from Bangalore, India, is a leading applications development and business processing outsourcing company.

EDS Advanced Solutions: EDS Advanced Solutions Inc. is a subsidiary of EDS Canada. It was incorporated in May 2004 and is headquartered in Victoria, British Columbia.

Recent acquisitions

In May 2008, HP and EDS announced that they have signed a definitive agreement under which HP will purchase EDS at a price of $25.00 per share, or an enterprise value of approximately $13.9 billion. The terms of the transaction have been unanimously approved by the HP and EDS boards of directors. The transaction is expected to close in the second half of calendar year 2008 and to more than double HP's services revenue, which amounted to $16.6 billion in fiscal 2007. 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 it has 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.

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.

On 3rd April 2008, EDS acquired Vistorm Ltd - an information security services company based in the U.K. The acquisition will create one of the largest Information Assurance and Managed Security Services firms in Europe.

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; 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."

Locations

EDS operates in 65 countries, centered in the metropolitan areas of Dallas-Ft. Worth, Texas; Detroit, Michigan; Des Moines, Iowa; Clarion, Iowa; Salt Lake City, Utah; Indianapolis, Indiana; Winchester, Kentucky; Tulsa, Oklahoma; Boise, ID; 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 and Italy.

EDS's Plano, Texas campus is located about 20 miles (30 km) north of downtown Dallas ( ). 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 real estate development, which EDS built.

Company sponsorship

EDS is the title sponsor of the PGA Tour's EDS Byron Nelson Championship, played in nearby Irving, Texas. The tournament raises about $6 million dollars each year for youth and family service centers in Dallas. From 1998 to 2001 EDS sponsored Derby County F.C., who during this time were members of the English Premier League.

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.

Services

EDS catalogs its services into three service portfolios which are Infrastructure, Applications and Business Process Outsourcing. 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.

Partners

EDS establishes a number of business alliances with other companies in the EDS Global Alliance program. The alliances are grouped into three groups, Agility Alliances, Solution Alliances and Technology Alliances.

The EDS Agility Alliance has worked on a range of projects, notably its Agile Enterprise architecture, EDS' next-generation global delivery system which EDS claims 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, and Xerox.

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 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.

Following on to the NMCI type of services, EDS in March 2005 won a US$4 billion contract with the UK Ministry of Defence 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 billion contract with the Infocomm Development Authority of Singapore, one of the largest IT projects ever undertaken in Asia.

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. These events were recounted in Ken Follett's book On Wings of Eagles.

Controversy

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.

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.

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.

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".

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.

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.

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.

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.

Leadership change

EDS announced on 19 July 2007 that its board of directors had unanimously elected Ronald A. Rittenmeyer, currently president and chief operating officer, as president and chief executive officer, effective September 1, 2007. Rittenmeyer was also elected to the company’s board of directors, effective immediately.

On December 4, 2007, Rittenmeyer was elected EDS Chairman of the Board. Michael H. Jordan, who has served as EDS’ chairman and chief executive officer since March 2003, became chairman emeritus and stepped down from the board of directors. Both appointments became effective December 31, 2007. Jordan, who joined EDS in March 2003, remains with EDS and serves as a strategic adviser to the company’s senior leadership team.