ANALYSIS: Client Profile - EDS' communication getting stronger -inside and out - Electronic Data Systems has struggled for an identityever since the 1986 departure of its popular founder, Ross Perot...

After the departure of founder Ross Perot, Electronic Data Systems

(EDS) lost much of its luster. The company missed revenue projections

and clients, and few people recognized it as a pioneer in the field of

information technology outsourcing.



Then three years ago, the board of directors hired CEO Dick Brown. Known

as a corporate trouble-shooter, Brown had most recently led England's

Cable & Wireless. He set out to reinvent the EDS brand, going beyond the

steps often taken by new CEOs, such as cutting staff and

streamlining.



Forward thinking cures anonymity



Brown started with a new advertising campaign strategy: cats and

squirrels were the stars of the firm's splashy Super Bowl ads. In 2000,

a "cat herding" commercial featured cowboys wrangling unruly felines. In

2001, stampeding squirrels chased Spanish daredevils through the

streets. The ads employed metaphors to communicate that EDS is full of

"smart people who can solve problems," explains global communications VP

Tom Mattia.



The company spent about $6 million on the squirrel ad, which

served as a springboard for greater PR efforts. The $50,000 PR

spend netted 450 million news impressions about the ad, which was seen

by 130 million football viewers, Mattia says.



The company has not always been so forward-thinking about

communications.



When Nancy Voith - now manager of Americas communications - joined EDS

in 1979, management wanted her to become a technical engineer despite

her PR background.



Back then, the company had 6,000 employees, $300 million in

revenue, and no communications staff. Media calls were handled by

"whoever answered the phone," says retired PR exec Bill Wright, a

veteran sales employee who formed the first small communications

department in 1979, the year Perot mounted a rescue of the hostages in

Iran.



The regimented company valued individuality, and executives cloistered

themselves in offices along the arch that connects the two halves of the

company's headquarters, recalls industry analyst Dean Davison of META

Group.



EDS was formed in 1962 by Perot, a future presidential candidate. He

quit IBM because the firm didn't like his idea of offering data

processing management services. He went off to start his own firm. "It

was a traditional good-old-boy Texas company," says Davison.



General Motors, still a major client, bought EDS in 1984, and Perot

exited soon thereafter, taking the EDS identity with him. From the

public's perspective, "Ross Perot was EDS, and EDS was Ross Perot,"

notes Mattia.



"It was the anonymity of the company that was a marketing problem," says

Wright. EDS then hired Fleishman-Hillard in 1990 to help build a new

image in Perot's absence. "The common belief was that Perot was still at

the helm," recalls Fleishman's Texas president Janise Murphy.



The agency worked for EDS until 1994, but soon after Brown's

appointment, Edelman was hired on a multimillion-dollar contract. The

company uses Hill & Knowlton in Canada and other regions.



Brown's arrival has also had a huge influence on corporate culture. Open

communication policy helped, but the amount of executive turnover has

made an impact, too. At a meeting of EDS' top 125 leaders in January,

META Group's Davison says about three-quarters acknowledged joining the

company since 1999. The guard changing was affected with few indications

of work force anguish, however.



"It wasn't that Dick Brown pulled the plug and purged dross," Davison

points out. "He said, 'This is a new ball game.'" By and large, those

who didn't want to play left of their own volition. For example, global

communications VP Mattia, hired from Ford in August 2000, is the third

person to hold the top PR job under Brown.



Communication is everything



While PR-leveraged commercials may be the most visible signs of EDS'

change in communications philosophy, Brown's focus on internal dialog

has been more acute.



To shift corporate culture, Brown coined a term EDS' computer-minded

employees could understand. He instituted "social software," the tools

of which include biweekly e-mails to all 125,000 employees from Brown

himself, and regular management meetings.



The CEO and his staff have responded to thousands of employee

replies.



Two-way communication not only keeps everyone informed, it helps keep

change-wary middle managers on track. "The level of clay you find in any

organization quickly gets eroded," Mattia says.



EDS' in-house communication staff now numbers 125, a quarter of which

have been hired in the last year. Most recently, Mattia began hiring

staff in places like New York to have people on the ground in major

media centers.



Nevertheless, the company's complexity has long posed communications

challenges. Brown consolidated more than 40 business units into four

basic lines: information solutions (IT outsourcing), business process

management (which includes customer relationship management),

E.solutions (the electronic commerce division formed when EDS swapped

assets with MCI WorldCom in 1999), and A.T. Kearney (a management

consulting firm acquired in 1993). EDS added a fifth division this

spring after acquiring Structural Dynamics Research Corp., a company

that makes computerized manufacturing design software.



Explaining it all to reporters isn't easy. "That requires some serious,

coordinated briefing of the press so that they're not looking at one of

the elephant's legs and thinking they understand the whole company," the

retired Wright says. "If we could ever get them to our facility where we

could literally show them what we were doing, it would be a little

easier."



EDS did just that on New Year's Eve in 1999. It threw a Y2K party for

journalists to show how it vanquished the millennium bug. "It was a

smart thing to do because it helped them show off their technology,"

says Dallas Morning News reporter Leah Beth Ward.



More recently, EDS made a big splash at the November COMDEX trade show

in Las Vegas. EDS scored a prime exhibit location and a keynote for

Brown by providing network services for the show. To entice attendees to

stay over for Brown's speech on the last day, the company hosted a party

the night before, featuring performances by Macy Gray and the Bare Naked

Ladies.



Mattia organized some 50 interviews and three press conferences during

the event.



Overall, the remaking of EDS has been dramatic. "I think they are poised

to give IBM a run for their money," says Linda Cohen, a Gartner Group

analyst. Employees are energized and customer focused. Profits are

up.



EDS has acquired a major airline-IT outsourcing business from Sabre

Holdings, landed a hefty Navy contract, and negotiated a hardware

services partnership with Dell.



Although she thinks future messages should be less abstract and more

substantive than cat herding, analyst Cohen agrees that EDS' new

emphasis on communications played no small part in the company's

turnaround. "You don't buy stock from a company you've never heard of,"

she says.



ELECTRONIC DATA SYSTEMS



Chairman & CEO: Dick Brown



VP of global communications: Tom Mattia (reports to Don Uzzi, SVP of

marketing, advertising, communications, and government affairs)



Director of corporate PR: Jeff Baum



Director of global community affairs: Debbie Snyder



Director of business and IR: John Clendening



Manager of executive communications: Brooker Thro



Manager of Americas communications: Nancy Voith



IR VP: Myrna Vance



PR agencies: Edelman is agency of record; Hill & Knowlton used in Canada

and some parts of Asia and Latin America Agency budget: About $2

million annually.



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