Is EDS Making Waves Across the Pond?

EDS’s billion-dollar deal with Royal Dutch Shell marks a milestone in the IT service provider’s attempt to market itself as a manager of other outsourcers – a capo di tutti capi, if you will.

At least, that is, according to some IT services industry watchers.

Outsourcing observers – and Shell employees – had speculated for months about who would get the multinational oil giant’s more than $4 billion worth of IT business (and nearly 3,000 IT workers). AT&T, EDS and T-Systems were all rumored to have made the short list. And in the end, executives at Shell sliced up the IT services pie, giving each contender a piece.

The deal has EDS managing desktop, service desk, on-site services, back-up/disaster recovery, mobile information protection, and managed messaging; AT&T delivering WAN and LAN, voice services, managed security solutions, mobility services and VPN support; and T-Systems taking over infrastructure and data centers.

EDS’s portion is worth $1 billion over five years. But what may be most valuable to the Dallas-based outsourcing provider is its stated role as operational integrator “collaborating closely with Shell’s other key IT suppliers,” according to the press release.

That makes EDS a “high-profile example of an IT services firm acting as a service integrator… for a multi-sourcing, multi-supplier IT contract,” says Ovum Research Director John Madden. Actual implementations of such a model are hard to find, says Madden, but interest is increasing: “One goal in this model is for a service integrator to reduce the overall complexity of managing multiple IT service suppliers, and to take some of the pressure off a customer’s internal in-house team to do so.”

Customers may view an EDS or an IBM as better equipped to manage multiple outsourcers than their own staff. Of course, that’s a compromise that’s chock full of potential conflicts of interest.

As the signing of new single-source, multi-billion dollar deals has slowed and interest in the multi-sourcing model increased, EDS certainly hasn’t been shy about positioning itself as the big outsourcer on campus and master of this new domain. It will be interesting to watch the ménage-a-trois at Shell to see how it shakes out. Will it be the wave of the future or a flash in the pan?

Meanwhile, this high-profile deal begs the question: which fox (if any) do you trust to guard your henhouse?

Stephanie Overby

Senior Editor

CIO magazine | CIO.com