Commentary: EDS should revamp by targeting core customers

By Lorrie Scardino, Gartner Analyst

EDS and other large systems integrators have made significant investments that they believe will position themselves to compete against smaller Internet professional services firms.

The companies are still in the process of reinventing their business models to compete effectively in the e-business services market. EDS has targeted much of its efforts toward start-up or momentum companies, which do not provide the same level of revenue stability that EDS' traditional customer base offers.

Gartner believes that the company should

	See news story: EDS shares plunge on revenue warning

look to capitalize on its long-standing relationships by focusing its reinvention strategies on core customers. EDS' historical strength in systems implementation will position it favorably to win business, specifically those engagements requiring deep technical expertise. The company should look to balance its efforts going forward between new ventures and its customer base.

In general, enterprises should use the level of maturity of ESPs (enterprise service providers) and offer to determine reasonable value expectations in terms of price/performance and business results. A recent study conducted by Gartner shows that the following factors, in varying degrees, are critical for successful implementers of enterprise applications solutions:

• Process competence
• Geographical coverage
• Vertical knowledge
• Relative technology competencies
• Contracting flexibility
• Rapid implementation
• Track record
• Delivery innovation
• Culture and style
• Life-cycle coverage

No single provider is likely to be "world class" in all of these areas. Having a winning strategy requires that they carefully analyze their strengths and weaknesses with these factors, assess the needs of their target markets, and develop plans to plug any holes.

Buyers today, to a large degree, remain relatively unsophisticated in assessing capabilities. They will spend months selecting the product and implementing it on the basis of responses to a three-page RFP (request for proposal). But companies that rely on prospects' lack of sophistication expose themselves on two fronts: Risk of failure increases dramatically when real requirements do not match capabilities, and buyer sophistication is increasing.

Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.