[sinkspur]

ACS now has 29 out of 50 states under its wing. Why is EDS backsliding?

EDS has been late to the game of "consolidation." ACS, IBM, CSC have all chosen some "best of breed" systems software that they offer to new clients. You want something outside that portfolio, you pay extra for it.

EDS has, until last year, just run everything their clients want them to run, which can be very expensive if those clients have some specialized, or customized, code.

For a company that was founded on the principle of economies of scale, EDS was the last major outsourcer to realize the economies of standard software platforms.

[Huber]

EDS has been struggling to find its momentum in the past few years. The IT outsourcing (ITO) market has been relatively flat - in addition to IBM, CSC and Perot Systems, Accenture and HP have entered the space; the offshore market has introduced a new level of competitiveness; and all the growth is in Business Process Outsourcing (BPO) vs ITO. EDS doesn't have an edge in the BPO space where specialized expertise can be a key differentiator.

My real concern, however, is whether the state did a competent job in writing the contract in a way that will ensure sufficient governance, and that contains the appropriate enforceable service level Key Performance Indicators (KPIs); and whether the state has retained the ability to disentangle themselves from the contract if expectations are not met. Given NC's overall track record for zero accountability and lots of sweetheart deals, I would be surprised if the taxpayers are not left holding the bag on this one.

I may do a Freedom of Information request to see the details of this transaction!