by Martin Veitch

HP-EDS UK boss on BSkyB, the merger and building an alternative to IBM

Mar 03, 2010
IT Strategy

In my experience at least, EDS always had a tendency to keep itself to itself. That’s unsurprising as when it did appear in the press it was usually on the sticky end of stories relating to problematic public-sector projects.

However, since being acquired by HP the services giant may be putting its head above the parapet a bit more. I hope so as the group, now renamed as HP Enterprise Services brings in about $4bn in annual revenues in the UK alone and is responsible for some of the most important government and public-sector contracts in the country.

So I was delighted to take up an invitation to meet a 15-year veteran of the former EDS, MD and VP Craig Wilson earlier this week for what turned out to be a remarkably frank discussion.

Keeping powder dry, I’d saved questions about the recent verdict in the BSkyB court case and its remarkably high penalties for last but Wilson was forthright throughout.

What did he make of the case?

“It’s a bit like yesterday’s chip paper at EDS,” he said. “The whole IT industry was in the middle of year 2000 [when the disputed agreement was made]. It was ‘go, go’ and it was crackers, the end of the dot-coms period. The people involved were exited even before EDS was a glint in HP’s eye. We’re obviously pleased that of the five matters raised, the judge rejected four of them.”

As for the notion that the case will represent a landmark decision, Wilson believes that this comes from a “slightly frenzied” legal community.

“The IT industry of 2000 is not the IT industry of 2010. We have far more controls in place. There is very close scrutiny of anything that is going to the client. It has been transformed by all comparison. Clients are much more sophisticated ordering in standard ways. That wasn’t the case in 2000 [and] the maturity is irreversible.”

Turning to the mega-merger with HP, I asked Wilson whether he had shed a tear for the passing of the EDS brand and what had been his initial reactions to the combination.

“Let’s face it, EDS wasn’t in great shape, even though we were the second biggest IT services company in the world,” he said. “We were turning in five or six per cent margins and aspired to generating $1bn in free cashflow which simply wasn’t enough. HP had the opposite problem: could it fund good stuff to do with the huge amount of cash it generated? So on the one hand there was this apprehension as to where you were going to end up, and on the other [the feeling that] something had to change.

“In some markets EDS had become quite a tired brand. Whereas HP has a reputation as being able to do business with, EDS had a reputation for being quite difficult to do business with. With an HP badge, I’m finding people want to talk about things. For CIOs, what’s attractive is having a viable alternative to IBM. The current challenge is to overhaul IBM. In the UK we’re already ahead and we head into 2010 with a tailwind. [The plan is to sell] services in a serious way to people buying HP technology and vice versa. [HP can support] Top 1000 clients in a full-service way, the way they’ve got used to at IBM.”

And what of the integration process?

“The integration is pretty much done and dusted. The systems we run the firm on are all integrated. [In terms of processes and company culture] it’s a cross-fertilisation. If it wasn’t in both directions I probably wouldn’t still be here. It would have been wrong for HP to buy EDS and run it as HP.”

Key to maintaining the value of EDS is making sure that “everything runs through the client” in a single structure, he says. “The bigger clients didn’t want rogue spending all over the shop.”

In part 2 of this interview, Craig Wilson talks about how to men bridges between services firms and government/public sector and “a sea change” coming to the services sector

In part 3, he talks about the likely effects on state IT spending in the wake of the imminent general election