GM claims it is not ditching EDS from $3bn IT contract

General Motors claims it is not aiming to get rid of current outsourcing supplier EDS when it puts the $3bn contract out to competition in 2006.

Speaking at a CIO Symposium on 'Meeting Today's IT Challenges' in London, José Eiras, CIO of GM Europe, told delegates that the focus is now on preparing for the "third generation" of outsourcing at GM once the EDS deal ends.

"We are preparing ourselves for 2006 when the 10-year contract with EDS ends. We're not doing this to get rid of EDS. We want EDS to continue to win a big part of that business. It knows our business better than any other company," he said.

Eiras said that IT costs at GM have come down from 2.5 per cent of revenues to 1.5 per cent of revenues since the EDS contract started in 1996 – representing a cost saving of $1bn. But he said the company is inviting other vendors into GM to "learn about our business" so that they will be able to bid competitively against EDS.

GM's links with EDS go back to 1984 when, after discussions with founder Ross Perot about outsourcing GM's IT to the services firm, GM decided to buy EDS. Eiras described it as "out-insourcing" and said EDS at the time was just one third the size of GM's internal IT department until those staff transferred across as part of the deal.

EDS was then spun off in 1996 and GM signed a 10-year outsourcing deal with the company to overhaul an IT function that was holding the organisation back. Eiras said GM at the time had just "average" business processes, few operational metrics, 7,000 systems, no common desktop and network instability.

"If you have an internal organisation that big it is like having an iron ball on your leg. Outsourcing gave us a lot of speed to change things."

GM is now in the middle of major SAP and PeopleSoft rollouts and a CRM pilot in Europe, and Eiras said the focus is on working with global IT suppliers.

"We want companies who can do things on a worldwide basis. We don't want sales and marketing systems just for Europe," he said.

A portal strategy has also been key to GM's business with a range of transactional portals for different GM business units aimed at customers, dealers and employees.