EDS reorganises itself

EDS reorganises itself

Electronic Data Systems (EDS) last week announced a major reorganisation along geographic lines and offered details about its new E-Business initiative. Both moves are designed to jump-start the former market leader, which has fallen behind IBM in revenues and also behind Computer Sciences (CSC) in terms of its rate of growth.

EDS will reorganise into five geographic management regions instead of its traditional industry units as the primary channels for marketing, selling, and delivering products and services to clients.

The moves are a step in the right direction for EDS, but whether the company can successfully execute them fast enough is another question, according to Traci Gere, vice president of US Services Research at International Data Corp.

"EDS has specific challenges in defining who they are in the marketplace and where they are going to play," Gere said. "As they go through this identity crisis, their competitors are gaining momentum."

Gere pointed to IBM's extensive marketing campaign, creating a brand for itself in the services market.

In addition, EDS is more aggressively targeting the electronic-commerce market with its new E-Business Solutions unit. The unit incorporates EDS' C2O Internet services and consulting unit, an earlier attempt by the company at tapping in on the e-commerce business.

"They launched their C2O Internet services and consulting initiative to address e-commerce, but did not invest enough in that to make a difference," Gere said. "They are having to take a step back before they can take any steps forward."

Under its new structure, EDS will eliminate the traditional vertical industry focus the company has followed. The units will include Europe, the Middle East, and Africa; Canada; Latin America; Asia-Pacific and the United States.

Job cuts

EDS' reorganisation follows an announcement last week of plans to cut 5200 jobs from the 120,000 member workforce of the company.

Also, the company has said it wants to cut $US1 billion in costs and reach a 10 per cent operating margin by the end of 2000.

In addition, the company announced a quarterly loss of $20.6 million on revenues of $4.32 billion. EDS attributed the loss to restructuring charges of $379.8 million. For the same quarter last year, EDS posted $184.2 million in net income on revenues of $3.94 billion.

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