Electronic Data Systems and Sun Microsystems Inc. are teaming up to sell each other’s wares – a move company executives believe will produce US$3 billion in additional sales over the next five years.
The companies announced the alliance during a conference call Monday afternoon.
This partnership creates a concept that Masood Jabbar, Sun’s executive vice-president of global sales operations, calls “one throat to choke.”
“We are forming a team to deliver a tightly integrated, end-to-end offering at a single point of contact for our customers,” Jabbar said on Monday. “As a unified team, Sun and EDS have to work closely with clients to understand their business visions and map their goals to clearly define their technology objectives.”
As part of the “Sun-EDS Continuum of Services” program, Sun will provide hardware, software and architecture while EDS will provide services such as systems implementation, integration, consulting and outsourcing
The Sun and EDS relationship works because there is little conflict in their products and services, said John Wilkerson, EDS’s vice-president of global alliances and direct marketing strategies. He added that this makes the alliance completely unique.
“When we take a look, EDS is not in the business of creating hardware or software and Sun is not in the business of creating service solutions,” he said. “As we added our numbers together, there was about US$3 billion in incremental revenue to be gained through this.”
The complementary relationship is what they plan to use to sell their partnership globally.
“We will have a plan of attack in each part of the world where we have presence and we will be increasing our presence where we don’t have presence already,” Jabbar said. “We have had discussions with EDS and we have targeted the usual suspects – it is government, it is health care, it is education, it is the financial industry, it is telecommunications. That is where we have expertise and that is where we will build package solutions together.”
Specifically, the companies will work jointly on development, promotion, marketing, revenue targets, planned cross training, account planning, offering development and marketing strategies
Wilkerson believes the alliance offers new opportunities for Canadian customers as both EDS and Sun already have a “great presence” in the Canadian market.
“Canada has been a substantial market for both of our companies,” Wilkerson said. “This offers an opportunity to go back and visit with existing customers and talk about technology refreshers. There are also some new and emerging markets that we would like to have a bigger footprint in.”
He added that EDS and Sun see Canada’s financial industry market as a specific area of great opportunity to use solutions working in other global markets.
“We have underway two active pursuits that are taking place (in Canada) that are somewhat market defining and we think that combined, we have a pretty good opportunity to secure some business there,” Wilkerson said. He would not comment further on the pursuits, but said there would be an announcement about them “very soon.”
While the partnership may be unprecedented, it is anything but surprising, said Jason Bremner, the senior analyst outsourcing services for IDC Canada.
“It’s a good thing for both organizations, but it’s not earth-shattering,” Bremner said after the conference call yesterday. “This puts a bit more structure and a bit more formalization to this relationship and there is 100 people associated with this relationship now and by doing that, they can get more prominence for both organizations. By having the structure, they can take a bigger spotlight.”
While EDS has been seeing higher profits than Sun over the last year, Bremner said he doesn’t believe this alliance will benefit one company any more or less than the other.
EDS saw revenue of US$19.2 billion last year and which continues to grow, breaking quarterly records for contract signings. Sun, however, lowered its quarterly revenue estimate to about 20 per cent less than the previous year.
“They will gain equally as long as they take advantage of it equally,” he said. “They are going to get out of it what they put into it.”
EDS, a service company with about 9,000 customers, said the move will help them gain clients looking for Sun technology, as well as helping to gain some of the vendor’s small and mid-sized client companies. Sun executives say they have lost business in the past to clients looking for a service component to complement it’s software, hardware and programming products. The two companies will jointly develop, promote and market offerings including; web site management, data centre outsourcing and application service provisioning hosting.
“When it comes to other systems integrators, you have to understand, this is not an exclusive arrangement,” Jabbar said. “We are great partners together and we will forge a partnership that is unprecedented in our industry, but EDS is free to partner with others and so is Sun.”
EDS Canada, in Toronto, can be reached at http://www.eds.com/canada. Sun Microsystems of Canada, in Markham, Ont., can be reached at http://www.sun.com/. IDC Canada, in Toronto, is at http://www.idccanada.com
– With files from Laura Rohde of IDG News Service.