EDS promises 20% saving with Agility Alliance

Electronic Data Systems predicts large customers will save 20 percent over the life of a contract for if they buy into its new Agility Alliance.

There are already several founder members of the alliance. These include Cisco, Dell, EMC Microsoft, Sun and Fuji Xerox are the foundation members. These have now been joined by Oracle, SAP, Siebel and HR consulting company Towers Perrin.

The plan is to provide customers with a seamless technology platform that includes infrastructure, applications and business processes.

At a press conference in Sydney last week, EDS' vice president and general manager for Asia Pacific, Phil Pryke, said the alliance would give EDS and its partners a significant business advantage in the region.

"It's not unusual for companies to forge one-on-one partnerships, but there has never been such a commitment from industry leaders to unite in this multilateral way," he said.

"Clients will have access to the combined resources of the world's major technology companies but with the convenience of EDS being their single point of accountability and at the lowest combined cost."

The partners spent most of 2004 working through the details of the alliance, which Pryke says will bring cost savings over the life of a contract of 20 percent, with savings on a forward cost curve of 8 percent to 12 percent.

In Asia Pacific the alliance partners have seconded staff to the EDS solution response centre in Sydney to work as an integrated team on joint business solutions. There are global agreements for the partners to train each other's staff locally, and incentives for sales staff aimed at driving alliance sales.

Pryke says the biggest constraint may be the capacity to respond because the concept has generated so much interest among Asia Pacific customers.

US vice president Robb Rasmussen, who heads up the partner alliance, says there are clearly defined roles for each partner, as well as an agreement to set aside competitive overlap.

Thus, in the case, say, of SAP and Siebel, SAP will be targeting the ERP part of the solution, and Siebel will target customer relationship management.

There is a synchronised technology road map, with aligned processes. Rasmussen says the governance structure is complicated, with two and sometimes three representatives from each partner. "Sales are the most challenging to govern," he says. "Clients are looking for a single point of accountability."

He summarises the value proposition to EDS as providing differentiated value through collaborative innovation; redefining how IT and business services are delivered, and providing cost leadership and improving margins.

Traditionally, EDS has been agnostic about product. The alliance changes all that with its common reference platform, based on the EDS Agile Enterprise Platform, which will align IT systems in core areas such as networking, workplace management, hosting and storage infrastructure, applications and business processes.

Though the partner's products will have priority, non-alliance products can be plugged in - at a higher cost.

The one technology the alliance is concerned about is Linux. Rasmussen says they are cautious about it. "We're not confident at the enterprise level. We're concerned about security and scalability. It could go the Unix route, and we're not seeing compelling cost advantages."

EDS has been under financial pressure for some time, its stock rated as being not much better than junk bonds. Rasmussen openly admits that, to some extent, the company is betting its future on the alliance, which he doesn't envision having other companies join "in the near term".

All the partners were represented at the press conference by their respective Australasian managing directors.

It was made quite clear that IBM was the major target. EMC managing director Steve Redman described IBM services as integrated mediocrity. While, in a video clip, Sun Microsystems boss Scott McNealy said quite bluntly: "The idea is to kick IBM Global Services on the backside as hard as we can."

That, as much as anything, seems to be what is behind the recent decision to switch development tools from IBM Rational to Borland. Testing is already under way in New Zealand and in South Australia, where EDS has a large development centre.

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