A Tale of Two Turnarounds at EDS

By: Gaurav Tomer Parshant Ranga Pratik Agarwal Vaibhav Agarwal

Reason for Crisis

When EDS spun out of GM, it had to give GM ten years of extended contract discounts along with $500mn. Lagging behind in three critical areas:
1. Adoption of client server model 2. Internet explosion 3. Work related to problem Y2K

Reasons cont
Lost clients such as Meredith Corp, Royal Automobile Club for their lack I expertise in client server model. Startups like Razorfish, Viant and Scient grew rapidly on the backbone of web services. All this led to market share drop to 13.9% from 17.4%

Aftereffects of Crisis
EDS began bidding more aggressively on the increasingly multi-billion dollar deals. Desperation to get more big projects led EDS to work on low margins. Stakeholders revolted for change in management leading to change of CFO and CEO.

Yerkes-Dodson Law

EDS Position When Brown Was Appointed

EDS has 48 inefficient operations with distinct business units. Internal complexity of company confused clients. Received multiple sale calls from different managers Aberthal had cut his own phone lines to prevent interuptions. No monthly financial data and no offical mail