Six Systems Integrators Share GM Contract

The world&'s largest auto maker, however, said the door is still open for smaller regional players to participate on specific projects, notably in application development and deployment.

Among those chosen by GM were EDS, Hewlett-Packard Services, Capgemini, IBM Global Services, Compuware Covisint and Wipro. EDS garnered the lion&'s share of the work, but the amount EDS landed will be slightly less than what it handles today, according to GM CIO and Group Vice President Ralph Szygenda. HP Services and Capgemini wound up with more work. Szygenda declined to discuss the dollar values.

“I would say that everybody is a winner, because first they had to win back the business they had,” Szygenda said during a conference call about the integration projects.

Though Szygenda wouldn&'t disclose the total value of the GM contracts, he said they represent about half of the Detroit company&'s annual IT spending. Based on GM&'s current IT budget, its total expenditures for IT could be as much as $15 billion over the next five years, but Szygenda said efficiencies and savings achieved through the new contracts will keep the total value of the integration contracts awarded Thursday at less than half that amount.

EDS reported that it won about 70 percent of the contracts it had pursued in the GM bidding process and that they would be worth approximately $3.8 billion over five years. The Plano, Texas-based integrator estimated that, on an annualized basis, it will generate $1.2 billion to $1.4 billion in business from GM.

According to Szygenda, the six integrators will focus on sustaining applications, building out GM's enterprise computing infrastructure and providing integration management services. A key reason they won the business was that all six suppliers agreed to work as one GM team using a common set of processes that are focused globally, rather than regionally.

“This benefits not only GM, which I&'m most interested in, but [also] this benefits the suppliers and maybe the IT industry as a whole,” Szygenda said. Of course, it also makes it easier for GM to switch integrators if a relationship isn&'t working well, Szygenda admitted.

Cost wasn&'t an overriding factor in the awards. “The winners had the best capabilities to offer GM to make it the most successful and innovative company,” Szygenda said.

Aside from the contracts disclosed Thursday, the other half of GM&'s IT budget goes to software and hardware acquisitions. The companies named in the integration projects and other players still have an opportunity to participate in that business on a transaction-by-transaction basis, Szygenda said.

The new IT contracts were negotiated with an eye to the June expiration of GM&'s pact with EDS, which was drawn up when the integrator was spun out 10 years ago. GM also is renegotiating its telecommunications arrangements and plans to announce the contract awards later this year, Szygenda said.