EDS To Target Smaller Project Opportunities

The move is intended to bolster top-line growth amid troubles at some of its enterprise customers and to counter missed earnings and plummeting stock prices, said EDS executives.

"Our focus [during the next four to six quarters is going to be meeting earnings targets and having a better portfolio and better focus," said Steve Smith, chief sales officer at EDS. "So we'll do some small deals and some medium deals, but we are not going after the [SMB market."

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EDS' Smith says goals are meeting earnings targets, having a better portfolio.

EDS' new Solutions Consulting unit primarily will be charged with chasing deals in the $50 million to $100 million range, as opposed to the integrator's traditional $250 million and larger megadeals that stretch over several years, Smith said.

Solutions Consulting is a $6 billion business line formed earlier this year when the company's applications service line was merged with the E Solutions group. But that doesn't mean EDS is walking away from megadeals. Smith said EDS just opened two megadeal centers, one in Plano and one in London. Those centers will work on development and solutions within megadeals, while another new business unit,Client Solutions, Global Sales and Marketing,will be charged with creating the proposals that EDS takes to its biggest clients.

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"It's still early, but we are measuring the strategy to see if it impacts sales velocity and win rates," said Smith. "We've made a lot of changes here, and now we need to demonstrate that we've done the right thing."

Bill Martorelli, vice president at research firm Giga Information Group, attended an industry analyst day last week in Plano and said EDS' new structure gives the company a good chance to make some progress in a changing market.

"Now that you've got IBM and PwC together, you've got offshore companies growing and obviously EDS is responding to that," said Martorelli. "If they can really leverage the strengths they have and blend them together, that's really the challenge and it's also a huge opportunity if they can make it work."

EDS last week also said that its fourth-quarter earnings will be reduced by an estimated 5 cents per share, due to investment losses related to aircraft leases with United Airlines, which filed for bankruptcy. EDS also recently reduced its profit expectations by about 80 percent during its third-quarter earnings call in October.

However, Dick Brown, EDS chairman and CEO, said the IT services industry continues to hold enormous potential. "It's been a difficult year, and we've been through our difficulties," Brown said. "But what's been covered up in this economic malaise so many businesses have found themselves in %85 are the many positive, innovative, industry-changing things [that are happening."