A Tale of Two Turnarounds at EDS

By: Gaurav Tomer

Parshant RangaPratik 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 model2. Internet explosion3. 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