Fresh off a first-quarter conference call in which it lamented the lack of megadeals, EDS has announced the signing of an eight-year contract worth about $1bn with German retailer KarstadtQuelle.
Under the deal, EDS will now control a 74.9% stake in Itellium Systems & Services, KarstadtQuelle’s services subsidiary. KarstadtQuelle will retain the remaining 25.1%, it said in a release.
According to German media reports, Itellium dos about 140m euros ($190m) in annual revenue. EDS spokesperson Travis Jacobsen said the majority of Itellium’s revenue comes from supporting KarstadtQuelle and its group of retail and consumer goods companies.
EDS will establish a retail-focused service center to support KarstadtQuelle, handling application development and maintenance for KarstadtQuelle’s department stores and online business, plus manage and support desktops, laptops, PDAs, and printers. The outsourcer said it will also manage third-party contracts for KarstadtQuelle’s infrastructure, including its retail network.
KarstadtQuelle plans to save approximately 650m euros ($884m) over the course of the contract. The company said its contract signed in 2004 with Atos Origin for infrastructure and network operations is still in place.
Monday’s announcement is surely welcome news for the Texas outsourcer, who said last week that most of its bookings haven’t been very Texas-sized recently. Fewer megadeals means EDS has to sign more deals of smaller size to keep its booking numbers up. With only $3.4bn in new contracts for Q1, this billion-dollar deal with. KarstadtQuelle helps EDS pick up the pace to hit its forecast of $32bn in bookings this year.
The retail and manufacturing segment is also one of EDS’ strongest target verticals. Last month it scored a big applications and infrastructure deal with 7-11, and last year it inked a monster $1.7bn deal with Kraft. The KarstadtQuelle deal also includes some applications work, an area EDS has been trying to boost its presence. These deals, along with last year’s purchase of application-heavy offshore outfit Mphasis and the fact that a healthy share of Q1 signings – 34% – came from applications, indicate that EDS is having some definite success in the applications space.