EDS win expected: IDC

IDC New Zealand country manager Dinesh Kumar says it's not surprising EDS has been selected as the final candidate to continue negotiating with Fonterra for the dairy giant's nine figure outsourcing deal.

IDC New Zealand country manager Dinesh Kumar says it's not surprising EDS has been selected as the final candidate to continue negotiating with Fonterra for the dairy giant's nine figure outsourcing deal.

"This is a classic outsourcing contract on a large scale and EDS, IBM and CSC etc have an extensive track record in that area - they've done it before in similar circumstances spanning multiple geographies."

HP, a later entrant to the services and outsourcing game, has been doing things quite well, he says.

"[But] in some instances they don't make it and this is one of those cases."

To some extent, HP realised its limitations by partnering with Unisys, which had entered a separate bid for the contract, earlier this year, Kumar says.

"It's a very complex deal."

To whittle candidates down to one, but still not confirm that outsourcing will definitely go ahead is a standard business practice, he says.

Fonterra began looking at outsourcing its IT last year and while a decision still hasn't been made, Kumar says that's not unusual for an undertaking of that size.

"EDS' outsourcing deal with Telecom wasn't something that happened in a couple of months."

While that deal is of a larger monetary value, at $1.5 billion, what sets the potential Fonterra deal apart in New Zealand terms is its global nature, he says.

"It's quite complex, involving 34 countries - that's what's a bit unique about it."

The deal, believed to be worth up to $800 million over several years, would involve looking after all Fonterra's IT processes, including desktops, laptops, servers, networks, helpdesk and utility software such as Microsoft Office, GroupWise and Lotus Notes. Kumar says how much of the money would be "pass-through" revenue, ie supplying hardware rather than true services, is yet to be determined.

"We don't know what the splits are. Like the Telecom deal, most of the procurement would need to go through EDS."

Kumar doesn't rule out EDS teaming up with its old rivals for the contract, or outsourcing specialists who didn't bid, should it go ahead.

"There's nothing stopping HP, Unisys or IBM working with EDS."

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