Some Advantages over IBM
Looking at IBM, are there any other vulnerabilities where you have an advantage? Our ability to team is very important. EDS traditionally didnt do this well, but weve certainly made it a hallmark of the turnaround being able to team with different software players and with Accenture in certain areas. I think thats been a real change for us.Yes. There have been a couple of instances where weve had pitches about development and infrastructure and ongoing management and we teamed with either a specialized applications house or even with Accenture. Its not something that IBM is very comfortable doing. IBM does make noises about being attuned to partnering. They are saying the right thing. They are the greatest "sayers" in the world [laughter]. GM is a big topic of the moment. Were still optimistic, although nothing has been finalized yet. Were optimistic were going to do well. Is GM asking for very aggressive financial terms from the bidders? I cant remember the specifics, but these guys are always tough. Theyre very demanding, GM and Ford both. Do you have to be cautious about doing business with a customer that could go bankrupt? I think its always important. I personally dont believe that GM is going to go bankrupt. They are in a position to extract significant concessions from the UAW. EDS swabs the decks of NMCI mess. Click here to read more. I think bankruptcy is a last resort if they dont. But the UAW would be foolish to take their chances on bankruptcy. IBM announced it was freezing its pension plan and encouraging people to move to a 401K plan. EDS has a pension planany similar thoughts? Weve looked at that. Were still evaluating what the impact would be on our employees and on our cost to do the same thing, in a slightly different situation. Looking at profitabilitywhat are the key components youre looking for now in a contract that EDS was not finding a few years ago? In 03, when I came in we changed our whole approach to doing contracts. If you look at our real problem accounts, in a lot of them we accepted such onerous terms and conditions that any mistake resulted in very high paymentsway off the industry standard. So we have really tightened up our procedures. We took our best technical people, our solution architects and moved them into the sales forcerather than having the sales guys try to do detailed design, sometimes imperfectly. The second thing is that any major contract that has non-standard terms and conditions has to be approved by me. What is the definition of non-standard? It would be very onerous service levels and penalties. There is kind of an industry norm. In terms of technology, it would be not staying within the Agile Alliance. We incent our sales force to sell our standard solution. If they sell the hundred percent standard solution with the alliance, they get a few more bucks. We find that works wonders in getting their attention [laughter]. The Navy Marine Corps Intranet was a problem you addressed early on. Are you pleased with where that is now? Yes, we are. We put in a new team in the beginning of 04. We had a couple of surprises we didnt expect in the first quarter of 04. Since then, weve really pretty much stuck to what we said were going to do. Were in the midst of looking at an extension. It was a very vague contractif we had it to do it over again, we would have done a lot differently. We feel that going forward, the Navy Marine Corps will be an important piece of business and a profitable piece of business. Do you mean profitable over the lifespan of the contract? Or just that by the end of the contract, your run rate will be in the black? We dissipated a lot of money, almost three billion dollars. But we think well get a good percentage of it backmaybe not all of it. A parallel contract in some ways was the UK Ministry of Defence. Did you get involved in that personally? Oh yes. GM shakes up the outsourcing industry. Click here to read more. You must be convinced its not going to go the way of NMCI No, no. Its a very different contract. Its a very ambitious timetable. We think were pretty much on track to deliver the first user live by the end of this month and ramp it up in February. In many respects its a more ambitious program than the Navy because its actually going to be extended to deployed forces, both seaborne and deployed overseas, with all the attendant security problems. Itll be a good technology project for us. How do you stay within standards when its an armed forces project? The design must be done to their specifications. Its different from our standard desktop environment as it must be, given their security. So you were able to stretch the envelope for the sake of this deal? Yes. Next Page: Working with other vendors.
Did that pitch help when there was doubt about the company? You could say, look, youre not putting all your eggs in one basket. Weve got these alliance partners.