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Deal keeps EDS as GM's top IT services provider

But under new terms, other vendors will share in the prize

By Patrick Thibodeau
February 2, 2006 12:00 PM ET

Computerworld - General Motors Corp.'s big IT services provider, Electronic Data Systems Corp., will still run the majority of the automaker's IT services, getting about 70% of the contracts announced today by GM.
EDS said today that it expects $1.2 billion to $1.4 billion in annual revenue from GM, compared with about $1.8 billion under the contract that expires this year. EDS will also get hundreds of millions of dollars for ongoing services, such as business process outsourcing, that are not part of this agreement.
But sheer numbers give only a small part of the story. For GM, these contracts signal new directions in how the automotive giant works with vendors and delivers its global IT services, GM CIO Ralph Szygenda said today.
In total, GM is planning to award some $15 billion over five years to IT vendors for services and equipment. Today's announcement to six vendors is for about half that total, GM said (see "GM awards IT outsourcing contracts worth $7B").
And even though EDS gets the majority of that money, the contract is so huge that other vendors will be getting significant chunks of business. Hewlett-Packard Co. said the deal is worth about $700 million to it, and Wipro Ltd. put its share at $300 million. Capgemini, Covisint (a subsidiary of Compuware Corp.) and IBM also won awards. Moreover, these companies will likely sell equipment and services above the contract amounts.
But this announcement involves more than money. Szygenda wants to transform GM's IT operations, and this deal was crafted to make sure that happens. He said his top goal as part of the new outsourcing move, which began two years ago, is to ensure that vendors "use the exact same processes" in delivering IT services.
"We did that first because we have to make this look like one GM, not five or six or seven IT companies," Szygenda said.
Standardization is critical to accomplishing GM's other IT goals. These include the continued globalizing of the automaker's IT processes, which in some cases are now handled regionally in various worldwide locations. Using IT to foster innovation at the company is another objective, he said.
GM isn't disclosing whether these deals will cut IT costs, Szygenda said, because, in part, cost savings may be reinvested in new IT projects.
On the issue of offshore outsourcing and its contract with Bangalore, India-based IT vendor Wipro, Szygenda said GM already uses global IT suppliers, and said some of its vendors already do work overseas. "I don't think it's moving any resources, we are already there," he said.
Wipro, the only offshore



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