Corporate Makeover

With layoffs looming and profits slumping, straitlaced EDS hopes to attract new customers by designing hip Web sites. What would Ross Perot say?

COLORS AND SHAPES FLASH AND ZOOM across computer screens in a dim, wall-less office that looks like a nerd’s rec room. In one corner sits a somewhat unusual private conference space: a blue Geo with a small refrigerator and a coffeemaker in the hatchback and a phone next to the driver’s seat. Nearby, a table tennis table does double-duty as a conference table. Several of the male employees sport ponytails, and one of the vice presidents wears blue jeans. And, of course, the place and the people are wired to the max: Everyone has a high-speed Internet connection.

This space in the Infomart, the high-tech trade mart near downtown Dallas modeled after London’s Crystal Palace, could be the headquarters of any of a dozen start-ups on the Silicon Prairie (the stretch of high-tech firms along the Dallas—Fort Worth corridor). But what makes it unusual and even daring is that it’s part of Electronic Data Systems ( EDS), the Plano-based computer-services company that Ross Perot built, imbued with an ultraconservative image, and sold to General Motors. “People don’t think of us as wild and crazy guys,” admits William R. “Butch” Winters, the president of c2o Interactive Architects, EDS’s fledgling Internet group. But that may soon change. c2o could go a long way toward revising how people think about the company, as well as revving up future profits and dramatically shifting the way business is conducted on the Internet.

c2o (short for “chaos to order”) is a modest but creative offshoot that designs sites for the World Wide Web, and that makes it unlike anything ever tried at EDS. This is a company, after all, that has thrived for decades by managing complex computer systems and networks for big corporate and government customers; for example, in a typical bid for new business, EDS is expected to compete for state contracts when Texas redesigns and automates part of its welfare system. But EDS has stumbled recently in its traditional arena. In 1996 competitors like IBM grabbed most of the big contracts that EDS wanted. Consequently, the company’s profits fell 11 percent in the first quarter of 1997, resulting in a massive cost-cutting plan that could trim up to 9,000 of its 98,000 jobs worldwide. Some Wall Street analysts have said that EDS—which last year had revenues of more than $14 billion—needs to be more nimble and inventive in going after new business.

That’s where c2o comes in. Traditional EDS customers and some not-so-traditional ones are clamoring for a presence on the Internet beyond merely putting up a slick logo and reprinting an annual report on the Web. Savvy companies want to use the Web to market and sell products and give real-time information to their customers. “The whole game of the Internet now is ‘Where’s the money?’” says P. Craig Turner, c2o’s vice president of creative development. “‘Let’s go sell some stuff, let’s control costs, let’s do something that has a bottom-line impact.’” To that end, for a budding roster of clients that includes Hachette Filipacchi Magazines—the publisher of Elle, Car and Driver, George, and Premiere—c2o functions as a kind of one-stop shop for Web-site development. It will match an online strategy with a company’s overall business goals; design or rework Web sites with the latest digital image, sound, and animation technology; and build electronic mechanisms to ensure secure financial transactions on the Internet.

As a next-generation Web-site developer, c2o is at the center of a seismic shift on the Net. To date, the model for Web-site development has been the little guy—sometimes just one or two wireheads working out of a garage or a small office. By contrast, the big guys like EDS have racked up a lot of experience hosting Web sites, which means they run the sites off their own banks of computers, called file servers, and make sure they stay up and running. EDS has hosted about one hundred sites for clients such as Saturn, Mitsubishi, and Pepsi from an enormous facility called the WebVault at its Plano headquarters. But all the while, EDS was lacking on the creative and marketing fronts, which forced it to team up with ad agencies and design firms. Ironically, thanks to the creation of c2o, many of those agencies and firms are now EDS’s competition.

Techies say c2o marks the first time a big systems integrator has jumped onto the creative side of the Internet with a separate staff. “ EDS basically broke the mold,” says Josh Bernoff, a senior analyst at Forrester Research in Cambridge, Massachusetts, a leading computer research firm. Not surprisingly, other big systems companies are expected to follow. Forrester predicts that 840,000 businesses worldwide will have a presence on the Internet by the year 2000, accounting for 1.24 million sites that will be increasingly sophisticated and useful. “The Web used to be about image: brochureware, online advertising, marketing,” Bernoff says. “Now it’s much more about online transactions—looking up my brokerage account or buying a sweater from Wal-Mart. Behind that is a system with an enormous database trying to bring real-time data to you.” Not many small companies have the resources to run such a database, so the question of whether big companies will end up controlling Web-site development is a no-brainer. “Of course they will,” Bernoff says. “The question is how.”

EDS took a novel but necessary approach to answering that question when it quietly launched c2o in January. The company structured it as a “cultural breakout” free from the legendarily conservative corporate culture of its parent. It is independent in the sense that it can pursue new customers on its own rather than relying on other divisions of EDS. With its brightly colored workspaces and open layout, c2o is a vastly different world from EDS’s ultramodern corporate headquarters, where employees occasionally get lost in the labyrinth of cubicles. But the most important distinction is how people look. EDS has long been known for almost militaristic dress codes left over from its days under Perot, when

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