Feeds

EDS seals $4.5bn gig with Bank of America

Some good news at last

  • alert
  • submit to reddit

The Essential Guide to IT Transformation

ComputerWire: IT Industry Intelligence

Electronic Data Systems Corp made a major stride in its effort to restore its battered reputation yesterday by announcing a ten-year $4.5bn outsourcing deal with US financial giant Bank of America,

writes Joe Fay

.

EDS believes the contract ranks amongst the top ten services transactions ever, and is the biggest deal to date in the financial services industry. The deal covers the Charlotte, North Carolina-based bank's voice and data network infrastructure, and will see 1,000 Bank of America workers moving across to EDS.

The deal was finally signed yesterday, a day after market speculation that Plano, Texas-based EDS was about to clinch the contract helped push up its share price.

EDS has endured a tough few months. It was forced to lower its third quarter and fourth quarter forecasts, partly because of the financial difficulties of key customers. EDS's penchant for mega deals has also become a liability in the eyes of some, because of the high start-up costs they often incur. It issued a further profit warning earlier this week, because of investments associated with leveraged aircraft leases with United Airlines, which is in Chapter 11 bankruptcy protection.

However, EDS said yesterday that it would not be exposed to large start-up costs with the Bank of America deal. Larry Ivins, enterprise client executive at EDS, said that the bank had grown by acquisition, resulting in a complex network. EDS expected it could reduce the network elements by 30% he said. He said the strategy in the deal was to align benefits with costs. In effect, EDS will be taking a piece by piece approach to refreshing the network.

"It doesn't have the same upfront bubble as other megadeals," said Ivins. While this approach was suitable for Bank of America, it does not necessarily apply to other financial institutions or other potential clients, he added. "What we're doing for each of them is unique," said Ivins.

Ivins said the contract also covered across the board tier one help desk support for the bank. However, this represents less than 10% of the deal.

A spokeswoman for the Bank of America said it had spoken to a number of IT services and telecommunications companies before settling on EDS. IBM Global Services had been among those considered for the contract, she said.

While the issue of start-up costs and their effect on EDS' finances has been hotly debated in the industry recently, the Bank of America spokeswoman said while this may have a consideration, the bank "evidently felt confident."

EDS this week has been flinging as much good news as possible into the market. On Wednesday it announced it was in final negotiations with Bank of Bermuda for a $375m, 12 year deal. It also announced contract extensions worth $240m with other existing clients.

© ComputerWire

Related story

EDS issues profit warning on United bankruptcy

Boost IT visibility and business value

More from The Register

next story
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.