DETROIT -- After finishing second only to EDS Corp. in General Motors' information technology sweepstakes earlier this year, Hewlett-Packard Co. hopes to land an additional $200 million in development work with the automaker.
HP, of Palo Alto, Calif., emerged from the GM information technology contract bidding in February with a sizable $700 million in new work.
HP won eight of the 40 contracts the automaker awarded to information technology companies. It now is poised to land even more GM business, says Jim Angers, general manager of HP's GM account.
In an interview with Automotive News, Angers said HP went after more but is pleased with the contracts it landed.
"We feel real good about what we won because we believe we're in GM's core business," Angers said. "We're where they design cars, build cars, finance cars and are involved in their big back-office applications. That gives us a real good view in all the projects that they will have moving forward."
HP's $700 million in new GM contracts are to be spread over five years. The company did not lose any of the $300 million in annual GM business it already has, Angers said. Some of HP's new GM work came at the expense of EDS and IBM, he said.
$200 million more?
HP hopes to grab an additional $200 million in GM information technology development projects that come up over the next five years, Angers said. GM confirms that it has a development budget for such projects.
"If we do our job correctly, it would be at least $200 million," Angers said, speaking in HP's former "war room." The company set up the room in GM's headquarters, where it coordinated its 152-person GM contract-pursuit team. It is keeping the room to remain close to its customer during this transition and beyond.
HP's new business with GM spans five broad areas: product development, manufacturing and quality, General Motors Acceptance Corp. customer systems, dealer information systems and management support for GM's SAP enterprise software.
For example, HP won the management work for all of GM's engineering workstations worldwide.
Clearly, EDS, of Plano, Texas, took home the lion's share of the GM contracts - $3.8 billion worth over the five-year period. EDS says it landed 70 percent of the GM contracts it pursued.
EDS defended its business
EDS currently provides two-thirds of GM's information technology services. But its existing 10-year contract expires June 6. EDS expects its annual GM revenues to drop by about one-third, to about $1.3 billion in each of the next five years.
Angers thinks HP ended up about where it expected it would.
Kevin Reale, automotive research director at AMR Research, had estimated that HP would end up with GM contracts worth between $500 million and $1 billion over the five years.
While HP's $700 million award pales in comparison with EDS' $3.8 billion share of the GM contracts, "all these guys went in knowing that to displace an incumbent is always the toughest thing to do," Reale says.
Although EDS retained a large share of the contracts, GM probably was able to drive down the cost of EDS prices in certain areas, Reale says.
Angers credits HP's success in landing new GM contracts to the work it did for the automaker over the past several years. When GM spun off EDS in 1996, it gave EDS a 10-year agreement for the bulk of GM's information technology business. But some work was given to HP, IBM and other large information technology companies. GM wanted to test other vendors to determine whether they would make a good fit.
For example, GM had HP take over management of the product development systems in its technical center in Warren, Mich., a job once held by EDS.
"That's their largest engineering facility, so the test was, could we transition flawlessly the management of their infrastructure from EDS to HP without interrupting their business?" Angers said. "I think we were very successful."
You may e-mail Ralph Kisiel at [email protected]