Last week, Ford Motor Co. awarded Hewlett-Packard a five-year contract worth an estimated $200 million to manage more than 1,000 servers worldwide and provide network-management services. Ford is rapidly adapting its applications for the Web, says George Sordu, the automaker's director of technical infrastructure, and wants to "corner the market on skills" needed to support this new environment. The goal: to have an IT infrastructure that eliminates the need for business units "to chase after technology," Sordu says.

For similar reasons, the National Association of Securities Dealers Inc. last week entered into a 10-year contract worth nearly $2 billion with EDS. At least half of that will be spent on Web activities, says Gregor Bailar, CIO at the NASD. "Our goal is to focus on providing ease-of-access to our users via the Web," says Bailar. Access to Internet technologies and attention to scalability and complexity requirements were major factors in the NASD's decision to outsource, he says.

"We're transitioning more and more to an Internet-enabled business," says Mary Schapiro, president of NASD Regulation, the regulatory arm of the NASD. NasTech, as the agreement with EDS is called, will give the NASD the technology necessary to keep up with new ways of trading, globalization, and the growing market, she says.

The deal is a big win for EDS. "This agreement is the first time a single services firm has been entrusted to manage and develop technologies for a securities organization," says Mike Reddy, chairman and CEO of EDS's global financial markets group.

In On The Action
IT services vendors of all sizes are quickly positioning themselves to meet the new demand for E-business services, whether they involve LANs and WANs, intranets, extranets, or the Internet. E-business services include network design, engineering, and management; Web design and hosting; applications hosting; operations management; and consulting. The Inter- net-related consulting and integration services market is projected to grow to $42 billion by 2002, up from $7 billion last year, according to the Yankee Group.

Just last week, alliances were formed between HP and Nortel, Qwest and Oracle, and Sterling Commerce and Keane. Application service provider FutureLink Distribution acquired Micro Vision, a reseller and systems integrator, while Keane acquired Internet consulting firm Jamison/Gold LLC. Cabletron revealed plans to launch network-management services, and MessageQuest unveiled network- outsourcing services that could replace value-added networks with the Internet.

Computer Outsourcing Services, meanwhile, said it will retool 20,000 square feet of its central data center for Internet application hosting services because demand for these services has outpaced supply. This week, former executives of SHL Systemhouse plan to launch RedShift Interactive, an E-business services company to be built up through acquisitions, starting with XOR Network Engineering.

All this activity has raised some red flags. Gartner Group analyst Linda Cohen warns that too many companies are rushing into E-business in the same way they rushed into enterprise resource planning implementations. Businesses must be careful to avoid ending up with E-business systems they don't know how to use, as was often the case with ERP installations, she says.