HP and EDS: A Happy Marriage?

iTnews: What effect has HP had culturally on EDS?

Gee: HP gets a lot of credit for its operational discipline.

We have an operational vigor and maniacal focus on quality and competitiveness in terms of cost structure. That focus is on creating repeatable processes, pushing out our capability in an automated way to lower our delivery costs - it's really a part of our DNA.

iTnews: What effect has EDS had culturally on HP?

Gee: EDS is introducing a massive change at HP and for the better.

The way EDS has relationships with clients, they are strategic relationships, they require a partnership and a level of intimacy that HP has never had before.

HP has also gained access to EDS clients in terms of meeting their requirements from a product perspective. I can say EDS clients have actually changed HP's product roadmap.

iTnews: Has the merger resulted in many new customer wins?

Gee: There is very little overlap between EDS' customer base and HP's customer base.

EDS clients that might have been a bit hesitant to sign a long-term contract with EDS one year ago, perhaps thinking EDS' financial performance wasn't competitive with two of its larger competitors in terms of profit and growth, those doubts have been removed now.

Without this acquisition, those transactions might have been delayed or never have happened.

In the UK, we've picked up a US$1 billion deal with insurance company, Aviva.

Here in Australia we've picked up more work with Telstra. To have struck a highly strategic and large transaction in this part of the world is great news. And the area we have constructed this transaction, around applications, has been a competitor's stronghold. We have taken a piece of business from IBM.

iTnews: How close are you to closing the gap with IBM?

Gee: When you look at the services industry, from a size and scale standpoint, there is one 800 pound gorilla in the room in IBM. But the gap between number two and number three is huge - let's just say there is a lot of light between us and everybody else.

I don't expect us to do anything big [to catch IBM's scale], HP is still consuming EDS and that will take some more time.

What we see is a very addressable market in the 70 per cent of the rest that serves the market currently.

iTnews: Are there any more plans to acquire or divest services assets?

Gee: In areas like business process outsourcing, IT outsourcing and application services, there will be some shuffling. If we're not of critical mass and scale, we might acquire some capability.

As for divestiture, EDS was in a lot of businesses. There will be some divestiture in areas where there is limited differentiation or value-add for us. But these won't be large. 

iTnews: What big deals are at risk in the current financial climate? GM would have to be one?

Gee: General Motors is a large client of ours, no ifs or buts. GM is going through a challenging time, and certainly we're a core supplier to GM. GM and EDS have a long history - at one stage GM owned EDS.

EDS is part of the fabric of General Motors and we will be down in the trenches helping them with their restructure, helping them make the strategic choices they were unable to make prior to the restructure.

I can't predict if it's a revenue uptick or downtick to come from this.

iTnews: Is EDS a creditor of GM?

Gee: I can't say if we're a creditor, and I'm no expert on bankruptcy. But we would have made provisions for this. It's up to GM and the courts as to how to proceed.