EDS To Launch New Business Unit

EDS, the world's second-largest IT services provider, next week will make its most aggressive move to date in the software market. The Plano, Texas, services company is set to launch a new business unit devoted to selling and supporting product life-cycle management software, used by manufacturers to share information about their products both internally and with business partners.

The service provider's recent $950 million acquisition of collaborative product design and management vendor Structural Dynamics Research Corp., combined with the software it previously acquired with its purchase of product development vendor Unigraphics Solutions Inc., form the foundation of its product life-cycle management solutions business. EDS, which generated more than $19 billion in revenue for 2000, expects the new unit to draw more than $1 billion in annual revenue. Product life-cycle management solutions joins EDS's four other business units--I.solutions IT outsourcing, E.solutions systems integration, AT Kearney consulting, and business process management.

There's a growing demand for applications and services that let engineers and manufacturers exchange digital product planning, design, manufacturing, and distribution information via local networks and the Internet, says Tony Affuso, president of the product life-cycle management solutions unit and former Unigraphics president and CEO. "As manufacturers create data for a product they're designing and building, that data can be used in many downstream processes, such as customer-relationship management, service and repair, and marketing," he says.

By combining applications such as Unigraphics' product development and Structural Dynamics' Metaphase knowledge management with its consulting and hosting services, EDS is looking to improve service to clients like Northrop Grumman Corp., a $15 billion Los Angeles designer and manufacturer of aerospace and military aircraft and systems. "There's always been a requirement for product life-cycle management to keep engineers and designers from wasting time trying to find certain data or picking up data that's not current," says David Torchia, product-data-management practice manager for Northrop Grumman's IT sector.

While EDS says it hasn't worked out the details about which of Structural Dynamics and Unigraphics' software it will offer through a hosted model, Torchia says such a service would be valuable for companies that want to outsource the hosting and maintenance of their product-data-management applications. The caveat to such a hosted scenario would be ensuring information, such as classified military data used to design aircraft, is properly secured. Says Torchia, "The model hasn't been fully worked out yet."

Citing research from companies such as Aberdeen Group and Daratech Inc., EDS's Affuso says the market for product life-cycle management software and services will be $18 billion in 2001 and is expected to grow 16% to 20% annually over the next five years. EDS Friday expects to close a deal to repurchase the 14% of Unigraphics that it had put on the market in 1998. In 1991, EDS purchased Unigraphics from military aircraft maker McDonnell Douglas Corp., and then placed a minority stake of the software company on the open market.