Industry analysts consulted about the failure of the deal to sell up to 30% of Electronic Data Systems Corp to British Telecommunications Plc unanimously concurred that the deal was more critical for EDS owner General Motors Corp than for EDS and would have no short-term impact on the world’s largest systems integration company. Certainly, EDS’s flurry of activity in Italy and Spain over the last few months is proof that it had no dire need of BT to capture the interest of new cus-tomers and business partners in the southern reaches of Europe. Intent on fattening its meagre $20m Italian business – in a total computer market of between $20,000m and $30,000m – EDS has been negotiating with a number of companies, including Rome-based Database Informatica SpA, Italy’s third-largest systems house after Finsiel and Olivetti Information Systems, say sources at EDS and Database Informatica. We are talking to a small number of selected companies with the aim of making an acquisition, a partial acquisition or an alliance, says Xavier Ribas, EDS director of marketing for southern Europe. We aim to own a company by the end of 1993. Today, EDS has only one office in Milan, which combined the activities of SD-Scicon/GFI Informatique and of McDonnell Douglas Information Systems, and one in Rome, which is strictly a commercial office for GM Italia. We were late starters in Italy; we have only a minute presence, Ribas says. And, of course, EDS is not satisfied with that business in Italy, it was all inherited.

IBM Italia

We want a major presence that corresponds to the size of that market. Furthermore, says Ribas, We don’t want to spend 30 years, or even six years, going around knocking on doors to build a business. It’s a buyer’s market right now; everything is for sale, but we don’t want to rush anything. In early March, Robert McCashin, corporate vice-president and director for EDS Southern Europe, said EDS was very close to acquiring an Italian software and information services company with revenues in excess of $100m. It appears McCashin was referring to Database Informatica. A spokeswoman for Database said the company was in negotiations with EDS until IBM Italia, which holds 22.5% of the company, found out and put a stop to them. As a result, IBM Italia is negotiating with Database Informatica’s other shareholders to determine whether IBM will invest new money in the company. An IBM Italia spokesman in Milan said, Database Informatica needs additional capital and we are discussing with the other shareholders whether to do it, who will do it, and when. But IBM rules out the possibility of taking a majority share or of buying the entire company. Database’s other shareholders are Assitalia SpA, an insurance company, Fime SpA, a leasing and finance com-any based in Naples, and private investors. The spokeswoman says Database, which reported consolidated group revenues last year of $95.7m, needs approximately $24m in new capital. She noted that, if the shareholders decide against the increase, we have other offers, and did not rule out a return to EDS. Ribas says EDS is interested most in Italy’s manufacturing sector, which is huge, because studies show that computers are still not used strategically. There’s a substantial window of opportunity for us, he said.

By Marsha Johnston

EDS has stayed out of the public administration market in Italy because, up until now it’s been risky, Ribas says, adding that until the system of favours [bribes and kickbacks] is brought under control, we’re more comfortable in the private sector. One of the windows of opportunity in Spain is in telecommunications, where EDS has an agreement in principle with Telefonica de Espana SA, the state-controlled operator, to provide substantial systems integration services in the billing area, says Ribas. Although an exact figure is not yet available, Ribas says it would be probably one of largest software and services contract ever signed by Telefonica. The contract, which Ribas expects to sign by the end of June, is to provide a syst

em that will enable Telefonica to provide itemised billing. There is a lot of public pressure for better service, especially in this area. Our piece is part of a more complex modernisation program being undertaken by Telefonica, including the installation of digital lines, Ribas says. The system will be installed gradually, according to geographic areas, he said. He adds that EDS is one of a handful of Telefonica’s preferred vendors, which include IBM and the state-owned software company Eritel SA. Some years ago, Eritel had a captive market, but that’s opening up to non-state owned companies, he said. Since 1980, EDS has built up its business in Spain from nothing to $65m, Ribas says. He adds, Whereas in other countries in Europe, EDS has grown through acquisition, in Spain it’s been through knocking on doors and selling the business. Ribas said EDS started out in Spain with a joint venture with one of Spain’s better-known management consultancies, Bedaux SA. EDS subsequently bought out Bedaux’s share of EDS-Bedaux and it became EDS Spain. EDS built its business on three early contracts: with La Caixa, Spain’s largest savings bank; the national railway; and financial institution Caja de Madrid, he said. Today, EDS Spain’s business covers three sectors: manufacturing, finance and some public and government sectors, such as telecommunications. For the future says Ribas, We want to grow faster than the market, because that means we gain market share. That seems to cry out for acquisition. Indeed, McCashin did not rule that out in a recent interview: We have a nice bit of business in Spain. It’s growing but it’s not so big a piece of business that we couldn’t afford to do an acquisition, if it made sense.