When those same contracts suffer untimely termination, it takes someone with fine hearing and an unusually long industry memory to notice. So, when IBM Global IT Services announced that it was taking over for Electronic Data Systems on a major IT contract for Dow Chemical, this reporter (and others) heard a faint bell ring, launched searches into their story files and came up with the original 2001 announcement: A $1.4 billion contract over seven years to build and maintain a multinational IP network, DowNet, for 50,000 employees and contractors.
DowNET, now to be rearchitected and managed by IBM, was intended to aggregate Dows global voice and WAN (wide area network) operation under a single contract. Its telephony side was to showcase Cisco Call Manager IP PBX for call routing and Cisco Unity for unified messaging (which presents voice mails, e-mails and faxes in one Web-accessible in-box).
As an important proof case for Ciscos claims to scalability, it was to be six times the size of Ciscos next largest customer, then the New Zealand Ministry of Social Policy. Dow said then that it saw the converged network as a way to smooth the integration of recently acquired companies, most notably Union Carbide.
Call Manager and Unity were both to run on Windows NT servers, Cisco announced back then, and the primary network service provider was to be Equant, chosen for its MPLS (multiprotocol label switching) support for guaranteed quality of service and security. The contract followed pilot sites of 1,000 users in California, Belgium and Singapore, and was to be followed immediately by 750 more trial users in Sao Paolo, Brazil.
Early this month, EDS and Dow said they had reached a "mutual agreement" to cancel the contract. On July 28, EDS reported a $135 million pretax termination-related charge for an unnamed client that most industry watchers believed was Dow Chemical.
IBMs Todd Kirtley, general manager of the industrial sector at IBM Global Services, could not provide details, saying only that "Cisco will continue to be a key part" of the project, along with Equant and MCI for networking. Both Dow and Cisco turned down requests for interviews.
It appears that few can afford to go public with what they know on the story, risking Ciscos ire; not IBM, which, according to an industry analyst, does more than a billion dollars worth of business yearly with Cisco. Not some analysts, who count Cisco among their clients.
Not even another singed VOIP customer, Merrill Lynch, whose Cisco IP telephony deployment also diverged from plan last year and wound up a combined IP and TDM solution with Cisco and Avaya. Merrill was also under pressure not to drop Cisco, an analyst who requests anonymity suggests, for fear of losing its considerable brokerage business with the company.
This analyst reports hearing from Sao Paolo that integration issues there were "quagmirish." Several sources note that Dick Brown, then the CEO at EDS, was very aggressive in getting business, underbidding on some projects and agreeing to timelines that could not be met, ultimately dooming the agreement.
Gartner Groups Eric Goodness agrees that a "cone of silence" has been dropped over the EDS story. To add to the enormous technology challenge, he points out, different countries presented different regulatory environments. (Some countries even ban VOIP toll bypass in the interest of protecting the business of their national phone companies.)
According to a major Cisco systems integrator, Ciscos John Chambers has been negotiating hard with IBM Global IT services to keep Cisco VOIP equipment front and center for DowNet. "Cisco is standardizing on IBM servers–its some leverage," he notes. He also reports that Ciscos unified messaging and call center adjunct projects have run up against a lot of integration problems.
"Incrementally, they get better," he says. But he can list issues with malfunctioning displays on multiline phones, inconsistent user interfaces between desktop and wireless handsets, and other problems that add time to a project.
Cisco has badly needed to prove that its Call Manager IP telephony system can scale. Its initial entry into VOIP, through its acquisition of Selsius Systems, foundered on scale and required a total rewrite of the Selsius system kernel. "Since then, theyve rearchitected a lot of things," says the analyst. Its also widely expected that Call Manager will be ported to Linux and be offered on both OSes.