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Electronic Data Systems Corp. -
IT Services -
Category Directory
(972)
604-6000
5400
Legacy Drive
Plano, TX 75024
www.eds.com
Sales
$21.5
billion
Business Description
Electronic Data Systems Corporation, or EDS, is a leading global provider of
information technology and business process outsourcing services. We bring
together the world’s best technologies to help clients eliminate boundaries,
collaborate in new ways, establish their customers’ trust and continuously
seek improvement. A.T. Kearney, a high-value management consultancy, and UGS
PLM Solutions, a leading provider of product lifecycle management, or PLM,
software applications and related services, each operate as separate
subsidiaries of EDS.
As of December 31, 2003, we employed approximately 132,000 persons in the
United States and approximately 60 countries around the world. Our principal
executive offices are located at 5400 Legacy Drive, Plano, Texas 75024,
telephone number: (972) 604-6000.
Our predecessor was incorporated in Texas under the name Electronic Data
Systems Corporation in 1962. In 1984, General Motors Corporation, or GM,
acquired all of the capital stock of our predecessor, and we remained a
wholly owned subsidiary of GM until our split-off in June 1996. As a result
of the split-off, we became an independent, publicly held Delaware
corporation. Unless the context otherwise requires, references to EDS
include its predecessor and subsidiaries.
We make available free of charge on our Web site at
www.eds.com /investor our Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
all amendments to those reports as soon as reasonably practicable after such
material is electronically filed with the Securities and Exchange
Commission, or SEC. We also make available on our Web site other reports
filed with the SEC under the Securities Exchange Act of 1934, including our
proxy statements and reports filed by officers and directors under Section
16(a) of that Act. We do not intend for information contained in our Web
site to be part of this Form 10-K.
EDS Services
Our primary business is information technology and business process
outsourcing services. EDS founded the information technology, or IT,
outsourcing industry more than 40 years ago. Today, we deliver
infrastructure, application and business process outsourcing services to
clients in the manufacturing, financial services, healthcare,
communications, energy, transportation, and consumer and retail industries
and to governments around the world.
During 2003, our IT and business process outsourcing services, which had
been conducted through the Operations Solutions and Solutions Consulting
lines of business, were transitioned to a unified portfolio within our new
operating model comprised of our Global Sales & Client Solutions, Service
Delivery and Portfolio Management organizations. This model is designed to
allow us to go to market with a single face to the client, consolidate our
global delivery capabilities, focus our product and portfolio management,
and establish a competitive cost structure aligned with market demand. Our
Global Sales & Client Solutions organization provides a single point of
accountability for client relationships and serves as the center for EDS’
industry expertise. Our Service Delivery organization integrates and manages
the delivery of our services on a global basis, taking advantage of the
scale of our capacity as well as best practices, tools and processes to
deliver high-quality service in a cost-effective and responsive fashion.
Portfolio Management works with our other organizations to develop our range
of service offerings and determines their strategic direction.
Infrastructure Services. EDS Infrastructure Services delivers hosting,
storage, desktop, helpdesk, security and privacy, and communications
services that enable clients to drive down their total cost of ownership and
increase the productivity of their IT environment across the globe.
Infrastructure Services include:
• Hosting Services. EDS Hosting Services is a one-stop shop for hosting
services, including storage, application and Web hosting, and mainframe and
midrange management. EDS Hosting Services enhances a client’s existing
technologies, providing the flexibility and accountability needed to
alleviate productivity constraints, increase return on investment, extend
competitive advantage and promote customer loyalty. We provide the security,
data integrity, quick response to service disruptions and high availability
required for clients’ mission-critical business functions.
• Mainframe Hosting Services. We provide flexible, large-scale information
hosting solutions that optimize productivity, ease IT staffing constraints
and preserve capital. EDS Mainframe Hosting Services provides multi-platform
support to clients through flexible services coupled with a range of
optional features. We enable clients to achieve industry-leading levels of
service in systems management, software and hardware management, workload
management, security management, and business continuity.
• Midrange Hosting and Enterprise Service Consolidation. We offer
cost-efficient, tiered hosting support services to closely match a diverse
range of client needs. Modular, flexible service packages are available with
optional service uplifts and customizable adjustments. Our Enterprise Server
Consolidation Services provide centralization and consolidation of physical
and logical servers, data, applications and network to enable a reduction in
total cost of operation.
• Automated Applications Hosting Services. This offering includes the
installation of the hardware, software and infrastructure as well as the
ongoing operational and technical administration required to host the
client’s application environment.
• Automated Web Hosting Services. We offer a complete set of fully managed
services, including Web Servers, Application Servers, Database Management,
Managed Network, Storage on Demand, Security, Back-up and Restore, Business
Continuity and Disaster Recovery.
• Desktop Services. EDS Desktop Services delivers expert management and
support of the end user’s work environment, from the software applications
that support the client’s business practices to the supporting network
communications infrastructure. Desktop services include:
• Integrated Desktop. We offer comprehensive management of a client’s total
desktop environment. We support PCs, laptops and hand-held computing
devices, as well as associated support services such as helpdesks, asset
management of hardware and software, and administration of the servers and
networks that tie it all together.
• myCOESM. This service, developed in 2003, offers a user-centric business
model for the purchase, pricing and provision of desktop infrastructure
services. The myCOESM portal includes hardware, service and application
options for a monthly charge.
• Messaging and Collaboration. Messaging solutions provide mailbox service
as a base service to users through a hosted, locally or remotely managed
messaging system. This service includes Antivirus and Security, and also
includes migrating to more current releases and/or consolidating e-mail
systems. Collaboration Services secure Instant Messaging and virtual team
workspace to enable an organization to improve collaboration.
• Intelligent Storage and Mobile Information Protection. EDS Intelligent
Storage Services delivers agility and reliable data storage from the desktop
to the data center. Our array of storage strategy, design, SAN/NAS
architecture, implementation and management services is designed and
delivered to enhance security and business continuity. EDS Mobile
Information Protection is a managed service that backs up data on desktop
and remote/mobile computing devices and restores lost or damaged information
without the assistance of a helpdesk or internal support.
• Security and Privacy. We deliver consulting, technology, training and
managed solutions to ensure the privacy, integrity and continued
availability of critical information and processes. Our services and
solutions include smart cards and biometrics, perimeter protection of
logical systems, best practices in business continuity, security and privacy
training, and outsourced managed security and privacy.
• Communications Services. EDS Communications Services delivers
comprehensive, secure, flexible network services on a global basis ranging
from network support to management of an entire client network. EDS designs,
builds, deploys and manages a single seamless network that integrates voice,
video and data; improves the effectiveness of data exchange in the supply
chain; and delivers secure connectivity and smooth operations over a wired
or wireless platform.
Applications Services. EDS Applications Services helps organizations plan,
develop, integrate and manage custom applications, packaged software and
industry-specific solutions. We offer applications development and
management services on an outsourced or project basis. Services range from
outsourcing of all application development and systems integration to the
management and implementation of EDS-owned or third-party industry
applications. Benefits to clients for these services can include reduced
costs, extended value of technology investments, information sharing and
enhanced ability to adapt to market changes. Our Applications Services
include the following:
• Application Development. We create new applications, providing full
lifecycle support through delivery. We define the application requirements,
analyze application characteristics, implement to a production environment
and monitor performance for a warranted time. Services include custom
application development, application testing, mobile applications, workforce
enhancement, business exchange services, business intelligence solutions,
enterprise application integration, portals, dashboards and Web services.
• Application Management. We offer outsourcing support for specific
applications or entire applications portfolios, both custom and packaged,
including services for enterprise applications and support for PeopleSoft®,
SAP® and Oracle®. We assess the specified applications, plan the transition
and provide ongoing management to improve client productivity and operating
efficiency. We also provide applications rationalization, content management
integration and legacy application migration services.
• Transformation Services. We engineer and integrate technology-enabled
business solutions to optimize clients’ processes and help them achieve
rapid business results. Our services include transformation in the areas of
Customer Relationship Management (CRM), enterprise resource management,
procurement and supply chain.
• Industry-Specific Application Solutions. These solutions are designed to
support industry-specific needs. Our industry solutions span eight vertical
industry segments: communications, energy, financial, government,
healthcare, manufacturing, retail and transportation.
Applications Services offerings and capabilities are available via the EDS
Global Delivery Model, including the EDS Best ShoreSM delivery approach
which offers clients the ability to develop and manage applications in one
or more of our solution centres strategically located in cost-effective
countries. The delivery of our services with the EDS Best ShoreSM capability
offers a lifecycle approach to on-shore, near-shore and offshore
applications development and management with globally integrated, consistent
work processes and tools and project-sharing at multiple facilities for 24
hours a day, seven days a week development.
Business Process Outsourcing Services. Business Process Outsourcing, or BPO,
continues to be one of the fastest growing market segments in the IT
services industry and an important element of our strategy to enlarge our
business services footprint. BPO enables clients to achieve economies of
scale by leveraging a shared-services model which allows them to trade fixed
costs for variable costs. Our BPO service lines include: Administrative
Process Management; Customer Relationship Management; Enterprise Shared
Services, which is comprised of Human Resources, Finance and Accounting and
Procurement; and Financial Process Management.
• Administrative Process Management Services. We provide Medicare and
Medicaid claims processing to the U.S. federal and state governments helping
them lower program costs while increasing efficiency and performance. EDS
offerings include fiscal agent services; decision support services; fraud,
waste and abuse protection services; integrated pharmacy services; Health
Insurance Portability and Accountability Act (HIPAA) compliance services;
immunization registry and tracking services; and case management services.
We also offer Internet-based enrollment and eligibility inquiry
capabilities.
• Customer Relationship Management Services. Our CRM capabilities support
the full spectrum of business processes including sales, marketing, customer
care, employee care, technical product support, and fulfillment and
distribution. CRM services include Business Intelligence Services, enabling
clients to increase operational efficiencies and improve information
utilization through our customer intelligence, supply chain intelligence,
resource intelligence and financial and administrative process intelligence
offerings; Contact Center Outsourcing Services, offering customer care,
employee care, sales and marketing services and technical product support
through dedicated and leveraged customer contact centers around the world;
Demand Management and Distribution Services, offering end-to-end product
fulfillment and distribution services to clients in multiple industries; and
Warranty Services, including claims management, registration, part order
management, performance management surveys, pay for performance and extended
warranty services.
• Enterprise Shared Services. This service line provides BPO services in
three critical enterprise areas: human resources, finance and accounting,
and procurement. For each of these services, EDS manages all aspects
including technology, administration, customer service, business
intelligence and third-party relationships. Our integrated solutions combine
best-practice processes, leading technologies and experienced professionals.
• Financial Process Management Services. Our financial process management,
or FPM, service line is comprised of two related service areas:
Administrative Services, which includes Credit Services and Insurance
Services; and Financial Transaction Processing, which includes payment and
settlement, card processing and billing, and clearing transactions.
Industries where FPM focuses its services include Energy, Financial,
Healthcare, Communications and Retail. FPM services enable clients to reduce
operational risk and control costs.
A.T. Kearney
A.T. Kearney, a leading global management consultancy, became a subsidiary
of EDS in 1995. The firm provides clients with management consulting
services related to strategy, organization, operations, and technology and
transformation, as well as executive search services. A.T. Kearney addresses
issues on the CEO’s agenda by developing and helping to implement innovative
strategies that bring results.
A.T. Kearney serves clients through practice teams focused on major
industries, including: automotive; consumer products and retail;
communications, media and entertainment; financial institutions; high tech;
pharmaceuticals/healthcare; process industries; aerospace and defense;
transportation and travel; utilities; and government. The firm works in
collaboration with other EDS lines of business. Services provided by A.T.
Kearney include the following:
• Strategy and Organization Consulting. This practice is based on a strong
foundation in corporate and business unit strategy. A.T. Kearney helps
clients define strategic priorities, allocate resources, design their
organizations and implement change. Our primary marketplace offerings are
Business Strategy, Pre- and Post-Merger Integration, Top-Line Growth and
Pricing Optimization, Marketing Strategy, and Product Portfolio Management.
• Operations Consulting. Clients turn to A.T. Kearney for proven expertise
and strategies in four key competencies – supply chain and manufacturing,
supplier relationship management, innovation and customer relations
management. We respond to senior executive demand for answers that are
relevant to business needs, yet rapidly deployed and quickly implemented.
Our offerings include Sourcing Solutions, Manufacturing Excellence, Creating
Supply Advantage, Next Generation Cost Reduction, MRO (maintenance, repair,
overhaul) Management, and Supply Chain Performance Improvement.
• Technology and Transformation. This practice focuses on better leveraging
technology applications and infrastructure and advises clients on improving
the performance of corporate functions integral to successful operations of
a company – Finance, Human Resources and Technology. Offerings include
Enterprise Services, IT Value Management, IT Strategy, and Enabling Services
such as Procurement and Supply Chain and Customer Retention Management.
• A.T. Kearney Executive Search. Offers specialty practice teams in many
industries and virtually every functional discipline.
UGS PLM Solutions
UGS PLM Solutions, the product lifecycle management (PLM) subsidiary of EDS,
is a leading global provider of product data management, collaboration and
product design software applications and related services. UGS PLM develops,
markets and supports a comprehensive suite of applications that address all
phases of the product lifecycle, including concept development, design,
analysis and testing, manufacturing, service and maintenance, and
retirement. Its software applications enable global manufacturing
organizations to improve product design and quality, streamline product
development and manufacturing processes, and optimize the management of
product information, thereby reducing costs and time-to-market cycles and
enhancing product innovation. UGS PLM’s customers use its applications to
perform advanced product design and simulation utilizing three-dimensional,
or 3-D, digital technology. The company’s collaborative applications allow
users to share product-related information through Web-based collaborative
technologies in real-time. These collaborative technologies allow for
information sharing both among departments of an organization, including
product design, manufacturing, procurement, finance and sales, as well as
across its extended enterprise, including suppliers, outsourcing partners
and customers. UGS PLM’s applications provide solutions for the four
principal segments of the PLM software market:
• Digital Product Design. UGS PLM offers two digital product design
applications: NX CAD, for the complex requirements of large and medium-sized
enterprises, and Solid Edge®, for mid-range requirements of small and
medium-sized enterprises.
• Digital Simulation. UGS PLM offers three primary digital simulation
applications: NX CAE, Femap® and NX Nastran. These applications enable
product designers and engineers to optimize product performance by
simulating operational environments, including factors such as temperature,
stress and motion.
• Digital Manufacturing. UGS PLM offers two digital manufacturing
applications: NX CAM, for automating the manufacturing process, and
E-factory, for managing product, process, plant and resources requirements.
These applications provide a broad spectrum of manufacturing planning and
analysis capabilities that enable enterprises to increase efficiency and
reduce costs by incorporating manufacturing and production considerations
into the product design process.
• Digital Collaboration. The Teamcenter® digital collaboration and
visualization applications portfolio enables customers to digitally author,
identify, capture and share diverse types of product information across an
extended enterprise and throughout all phases of the product lifecycle. By
making the most current product information readily accessible to all
appropriate users wherever located, the Teamcenter® portfolio improves the
effectiveness of an organization’s extended enterprise. The Teamcenter®
portfolio’s solutions are also available in industry-specific versions, such
as Teamcenter Aerospace and Defense, Teamcenter Automotive Supplier and
Teamcenter Consumer Packaged Goods, that provide rapid time-to-value by
delivering off-the-shelf capabilities specifically tailored to these
industries.
UGS PLM has more than 41,000 customers, consisting primarily of original
equipment manufacturers and their suppliers, as well as educational
institutions. Its applications are primarily used in industries with complex
product development processes and intensive data sharing requirements,
including the automotive and transportation, aerospace and defense, consumer
products, equipment and machinery and electronics industries, as well as
other industries.
In connection with our efforts to focus on our core IT outsourcing services
business, we entered into a definitive agreement dated March 12, 2004 to
sell a 100% equity interest in UGS PLM Solutions to a consortium of three
private equity firms. The transaction is expected to close by the end of the
second quarter of 2004, pending regulatory approvals.
Revenues
Our fees are generally paid pursuant to contracts with our clients. These
contracts may provide for both fixed and variable fee arrangements. The
terms of our client contracts generally range from less than one year in the
management consulting business to up to 10 or more years in our IT
outsourcing business.
Other than GM, no one client accounted for more than 10 percent of our total
revenues in any of the past three years. Approximately 47% of our 2003
revenues were generated outside the United States.
Certain IT outsourcing agreements contain third-party benchmarking
provisions which generally permit contractual rates to be compared to a
range of market rates for comparable services on a periodic basis over the
term of the agreement. We refer you to the “Overview – Client Contract
Matters” section of “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” for a discussion of these provisions.
Approximately $3.2 billion of our 2003 revenues were attributable to the
U.S. federal government, including our Navy Marine Corps Intranet (“NMCI”)
contract discussed under “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.” Contracts with the U.S. federal
government are subject to various attributes that differ from other
commercial contracts, including modifications in scope of work due to
changing customer requirements, annual funding constraints of the federal
government and the indefinite delivery/indefinite quantity characteristics
of certain federal government contracts.
Services for General Motors
Approximately 10.5% of our total revenues in 2003 was attributable to GM and
its affiliates. We are the primary provider of data processing and other IT
services for GM and certain of its affiliates worldwide, including
integrated information systems for health and benefits, engineering systems
support, office automation, and plant automation functions. The loss of GM
as an ongoing major customer would have a material adverse effect on EDS. We
refer you to “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” for further information regarding our revenues
from GM.
Immediately prior to our split-off from GM in 1996, we entered into a Master
Service Agreement, or MSA, with GM that serves as a framework for the
negotiation and operation of service agreements for certain “in-scope” IT
services (as defined in the MSA) we provide to GM on a worldwide basis.
These “in-scope” services accounted for approximately $1.8 billion of the
$2.3 billion of our GM revenues in 2003. The remainder was attributable to
goods and services provided outside the scope of the MSA.
The term of the MSA will continue until June 2006 and may be extended by
mutual agreement of the parties. In addition, the MSA may be terminated by
GM if there occurs a “change of control” of EDS and other conditions are met
(including a determination by GM’s Board of Directors that there is
substantial uncertainty about our ability to perform our obligations under
the MSA or any other significant threat to our business relationship with
GM). A termination of the MSA would materially adversely affect our revenue
and earnings from and after the date of such termination. The extent of such
impact on our earnings will be based in part on our ability to reduce the
fixed costs associated with our services to GM, including property,
equipment and software. In addition, the extension of the MSA on terms less
favorable to us than current terms would also adversely affect our revenue
and earnings. We refer you to the MSA, which has been filed with the SEC,
for a description of the other terms and conditions of that agreement,
including certain market testing procedures to test the competitiveness of
our services.
Strategic Alliances
We maintain multiple technology practices and platforms to enable us and our
clients to select the right vendor for specific needs. The EDS Alliance
Program focuses on building and managing global alliances that enable us to
realize our strategic objectives and deliver competitive differentiation for
our clients’ businesses. We believe our strategic alliances help us provide
clients with the best solutions at a superior value. We have global
enterprise-wide alliances with leading hardware, software, storage and
networking firms, such as Cisco Systems, Dell, Microsoft, Sun Microsystems
and Xerox. We also have business alliances with companies selected to
provide specific, focused expertise within certain horizontal or industry
segments and solution alliances that support a specific solution or offering
in our portfolio.
UGS PLM has established business alliance programs with complementary
software, hardware and service providers to extend the scope of its
application offerings into specialized areas of the PLM market and provide
its customers with a broad base of support for implementation of
applications. These programs leverage and extend its core application
offerings and internal capabilities for providing service and support to
customers. UGS PLM’s business alliance relationships focus on the promotion
of its technologies as industry standards.
Competition
The IT services market remains fragmented and highly competitive. We face
competition from companies providing IT outsourcing and business process
outsourcing solutions. Our principal competitors in the infrastructure
services market, including hosting services and desktop services, are IBM
Global Services, Computer Sciences Corporation (“CSC”), Hewlett-Packard
Services, Unisys Services and Fujitsu. Our principal competitors in the
applications services market are IBM Global Services, Accenture Ltd.,
Bearing Point, Cap Gemini Ernst & Young, Deloitte Consulting and CSC. Our
principal competitors in the BPO market are Accenture Ltd., Affiliated
Computer Services, Convergys, Fiserv and Concord EFS. In addition to these
competitors, we increasingly see competition from niche offshore providers,
primarily India-based competitors.
A.T. Kearney typically competes against McKinsey & Company, Bain & Company,
Booz Allen & Hamilton, Boston Consulting Group, Accenture Ltd. and Deloitte
Consulting.
Principal competitors of UGS PLM Solutions include generalist computer-aided
design, or CAD, and product development software vendors that offer
broad-range systems, such as Dassault Systèmes S.A. and Parametric
Technology Corporation. UGS PLM also experiences competition from niche
product data management, or PDM, vendors such as Agile Software Corporation
and MatrixOne, niche software vendors in the CAD, computer-aided
manufacturing (CAM) or computer-aided engineering (CAE) markets, and
enterprise resource planning software providers, such as SAP AG and Oracle
Corporation.
Technology and its application within the business enterprise are in a rapid
and continuing state of change as new technologies continue to be developed,
introduced and implemented. We believe to continue to compete effectively we
must develop and market offerings that meet changing user needs and respond
to technological changes on a timely and cost-effective basis.
Patents, Proprietary Rights and Licenses
We hold a number of patents and pending patent applications in the United
States and other countries. Our policy generally is to pursue patent
protection we consider necessary or advisable for the patentable inventions
and technological improvements of our business. We also significantly rely
on trade secrets, copyrights, technical expertise and know-how, continuing
technological innovations and other means, such as confidentiality
agreements with employees, consultants and clients, to protect and enhance
our competitive position.
Some of our business areas are highly patent-intensive. Many of our
competitors have obtained, and may obtain in the future, patents that cover
or affect services or products directly or indirectly related to those we
offer. We routinely receive communications from third parties asserting
patent or other rights covering our products and services. We may not be
aware of all patents containing claims that may pose a risk of infringement
by our products and services. In general, if one or more of our products or
services infringe patents held by others, we would be required to cease
developing or marketing such products or services, obtain licenses from the
holders of the patents, or redesign our products or services to avoid
infringing the patent claims. There is no assurance that we would be able to
take any of such remedial actions or, if we are able to do so, that the
costs incurred would not be significant.
We are not aware of any pending patent or proprietary right disputes that
would have a material adverse effect on our consolidated financial position
or results of operations.
Properties
As of December 31, 2003, we operated approximately 321 locations in 44
states and 237 cities in the United States and 419 locations in 244 cities
in 43 countries outside the United States. At such date, we owned
approximately 6.9 million square feet of space and leased from third parties
approximately 22.6 million square feet of space. Our global headquarters
campus in Plano, Texas, contains approximately 3.2 million square feet of
office and data center space. Other than the 1.6 million square foot EDS
Centre building, which we lease for an initial term expiring in 2022 (with
certain fixed price purchase options during and at the end of the initial
term), we own all buildings and real estate comprising the Plano campus.
We operate 15 large scale Service Management Centers, or SMCs, to service
our IT outsourcing operations in locations throughout the United States and
in Australia, Brazil, Canada, France, Germany, the Netherlands and the
United Kingdom. In addition, we operate approximately 94 Solution Centres in
locations throughout the world from which our staff provides applications
services. We also operate service delivery centers, or SDCs, at
customer-owned sites or EDS-owned or leased facilities throughout the world.
SDCs usually support a single or small number of clients with more
specialized requirements than those supported at the large scale, multiple
customer SMCs or our Solution Centres. Our leased properties consist
primarily of office, warehouse, Solutions Centre, SDC and non-U.S. SMC
facilities. Lease terms are generally five years or, for leases related to a
specific client contract, generally have a term concurrent with that
contract. We do not anticipate any difficulty in obtaining renewals or
alternative space upon expiration of our existing leases. In addition to our
owned and leased properties, we occupy office space at client locations
throughout the world. Such space is generally occupied pursuant to the terms
of the relevant client contract.
We believe that our facilities are suitable and adequate for our business.
We periodically review our space requirements and consolidate and dispose of
or sublet facilities we no longer require for our business and acquire new
space to meet the needs of our business.
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