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EDS sees BPO opportunity in the Canadian market

Company executives say business application design needs to change

Plano, Tex. – With over 100 data centres under management globally in more than 50 countries, EDS Corp. (Nasdaq: EDS) works with a lot of vendor partners to deliver business solutions to a lot of clients, giving it good insight into the enterprise IT market.

From that perspective Stewart Hair, managing director of EDS Data Center Services, said the ongoing trend around the consolidation of the business applications space, with companies such as Oracle and SAP making high-profile acquisitions, is a positive for the industry and an opportunity for both large integrators such as EDS as well as smaller SIs and solution providers.

Speaking as part of a media tour at the EDS headquarters, Hair noted its easier to standardize, something all companies are looking to do, when there are less vendors out there.

“There’s also a very large opportunity around companies that need to migrate from their older legacy applications into the newer integrated applications,” said Hair. “It also opens up an opportunity for the next wave of companies with new ideas, and it makes room for more innovation. They’ll come in and fill the gaps where there are needs for innovation, and help the whole industry grow.”

In the Canadian market, EDS is seeing growth in the business process outsourcing (BPO) space said Jeff Kelly, executive vice-president of EDS Americas. While the company is doing less work with the federal government then in the past, Kelly said the provincial government opportunity is a growing market in Canada, as provinces look to outsource functions such as human resources, finance and administration and information technology.

The energy sector and the Alberta oil sands are big for EDS, and Kelly said they’re also working to make inroads into the financial services segment. CIBC is already a customer, outsourcing much of its HR functionality to EDS.

“We’re not as big as we’d like to be in the financial segment (in Canada),” said Kelly. “Our competition there is primarily IBM, and they have a logical in because they’re providing a lot of hardware and software to the banks.”

While EDS has lots of competitors in the business applications space only IBM plays in the infrastructure space as well and Charlie Feld, senior executive vice-president, applications services with EDS, said the company is working to leverage that advantage by rethinking the way applications are designed.

Most often the focus is on the build cost, said Feld, but in fact that’s the cheapest part of the investment. The application is going to run for five to seven years, and if you don’t “build for run” it’s going to cost you in the long-run.

It’s taking the thinking around application design full-circle. In the mainframe era you had to build for run because resources were scarce; the advent of the client server era made it cheaper to just buy another server, but now issues such as power consumption are making 20 per cent utilization too expensive to accept.

EDS’ role, said Feld, is to bring the vendors together through initiatives such as its Agility Alliance, and to reform the application development process by bringing the technical architecture, data management, network management and engineering teams all together during the requirements and design stage to help the development team consider capacity and security during the design stage.

More companies are also looking at software-as-a-service and cloud computing, a model Feld said will still see companies needing the assistance of SIs such as EDS. It’s no different from ecosystems integration, someone still needs to bring all the services from the different vendors together, no matter how they’re delivered.

“Whether you own it or you outsource it, it’s got to be integrated back into a role-based model that feels a lot like Google,” said Feld. “You just want to get in and do your stuff, you don’t care where it is.”

While the IT vendors have long been talking-up green technologies, particularly around the data centre, in recent months EDS has been seeing clients get a lot more proactive, and demanding, when it comes to their carbon footprints, said EDS futurist Jeff Wacker.

“Their clients need to prove to their customers they’re green so they’re asking for our help,” said Wacker. “Investors are asking about (green IT) too. They’re starting to ask for carbon disclosure products and reports; it’s a concern for institutional investors.”

That was echoed by Dale Hoenshell, EDS global environmental sustainability manager. Customers are even asking what their carbon footprint is within EDS, in terms of the IT resources managed by EDS on their behalf. There’s a need, said Hoenshell, for a carbon accounting system and an environmental information management system to allow companies to track their environmental impact and carbon footprint.

“You’re going to have to track that with the same rigour you do on the financial side, and that’s going to be a pretty big growth area,” said Hoenshell, adding equipment is going to need to be metered and monitored in ways it hasn’t before.

Wacker noted that while companies still aren’t willing to pay a premium for green IT, when you look at it holistically going green generally saves money, and not just in the long-run. While in itself a new lighting system may take, say, 15 years to pay for itself, when you consider other factors, such as the resulting lower air conditioning costs, the payoff can come much faster.

“You need to look at savings in terms of the whole infrastructure,” said Wacker.