Electronic Data Systems, the hobbled No. 2 computer services provider, plans to spend as much on advertising during the rest of 1999 as it did over the past decade, betting that a revival-in-progress under new management is making headway, executives said.
Raising the profile of the pioneering computer services firm, which was founded in 1962 by Ross Perot, its former chief-turned-presidential candidate, is vital to boosting the number of contract competitions where it is invited to bid for new business -- its weakness in recent years.
EDS was kicking off a humorous, sometimes even mocking, print and electronic media advertising campaign Sunday, under the catch phrase "EDSolved" that plays on people's fears of being left behind by the speed of change in the Internet age.
"We have been too low, too long," Richard Brown, EDS chairman and chief executive, said at press briefing Friday as he unveiled the campaign. "It's time we get the word out [about] what we do and what we have been doing," he said.
The marketing campaign follows last week's announcement of plans to streamline its corporate organization by restructuring its 90 to 100 existing business units into four businesses.
These units include A. T. Kearney, its business consulting arm; E.Solutions, its recently created Internet business unit; Business Process Management, its customer services and claims processing business; and Information Solutions, its centralized outsourcing business, which manages customer mainframe data.
Brown, who joined EDS in early 1999 from Britain's Cable & Wireless Plc, has set out to re-ignite the company after several years of sluggish performance, laying out higher growth goals, while paring its work force and hiring new management.
"We'll give our sales and marketing team the air cover they need," Brown said. He was referring to the need to raise the profile of EDS and get itself put on more shopping lists of potential customers looking to contract out their computer services work.
EDS plans to spend hundreds of millions of dollars advertising its brand, although officials declined to specify exact figures. The integrated media campaign was developed by Fallon McEilligott of Minneapolis.
"What we will spend from 12 September through Q4 [fourth quarter 1999] is probably what this company has spent in the past decade," said Don Uzzi, a successful consumer products marketer who joined EDS in August as its marketing chief.
One new EDS print ad takes a dig at rival IBM's successful electronic business marketing slogan. The EDS ad notes the complexity of electronic business, adding that the "e" in e-business encompasses a lot of "possibilities for your company. And a whole lot of questions and problems and complications," the text reads.
"That's where we come in. From a budding idea to managing the most complex systems," the text of the ad runs.
Computer services, a roughly US$400 billion market, remains fragmented, with no single player holding greater than a 10 percent share, not even No. 1 ranked IBM. This leaves EDS plenty of room to recover from its years of listless growth.
The total services market could double to $800 billion in five years if the trend continues that companies rent hardware and software services, instead of trying to own and manage complex systems in-house, EDS officials believe.
Investors are slowly regaining faith, as shares of EDS have doubled since Brown took over in January. Still, the stock remains almost exactly where it was three years ago, a time during which rival IBM's stock has multiplied 4-1/2 times.
"This is a stock that should be at $140 or $150 if the company had not let some opportunities slip away," said Rick deNey, EDS's newly hired chief strategist, a former investment banker who led the revitalization of consumer products Borden.
The frank-talking deNey is leading a planning process dubbed Project Breakaway that includes reorganizing EDS divisions to operate along more entrepreneurial business lines and to refocus the company into higher growth markets.
Brown said EDS remains on track to meet earnings targets this year while focusing on reinvigorating its hiring and human resources practices.
EDS is seeking to stabilize its growth by moving away from relying on a few key customers, such as US auto maker General Motors Corp., its former owner, which still accounts for a quarter of EDS revenues.
In response to reporters' questions, Brown downplayed the failure so far to reach a final deal on a multibillion dollar services pact it agreed to with telecommunications giant MCI WorldCom Inc., saying there was a "better than even chance it [the deal] may be signed" during this calendar year.
"We're going to have a record year.... (Even) without that contract, we're not changing our comfort zone with the consensus of $1.86," Brown said, referring to EDS's commitment to Wall Street to meet a 1999 year earnings target of $1.86 per share.
Copyright 1999 Reuters Limited.
