By Victor Godinez,
May 18, 2008:

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When Electronic Data Systems Corp. was launched in 1962, Ross Perot essentially created the computer services business, managing the technology and administrative departments of other companies and government agencies.

But Plano-based EDS is almost as famous for buzz haircuts and starched shirts as it is for pioneering a new business model. With Hewlett-Packard Co. agreeing to buy EDS, some analysts have questioned how well the California computer maker's culture will mesh with that of a company that once organized a hostage recovery mission in Iran.

Those concerns are overblown, say executives inside EDS as well as experienced observers.

While the company in the early days was indeed composed largely of ex-military workers who hewed to the dark-jacket-and-tie uniform, that aspect of EDS'
culture has largely faded.

What remains, said chief executive Ron Rittenmeyer and longtime employee and vice chairman Jeff Heller, is a can-do, disciplined mentality that should serve EDS well as it is integrated into H-P once the $13.9 billion sale is finalized later this year.

"I've always believed that within EDS is a spirit of operational excellence that other people can't touch," Mr. Rittenmeyer said. "We are by nature an entrepreneurial, customer-focused, reasonably results-oriented organization.

" That culture is Mr. Perot's legacy, said Mr. Heller, a former Marine Corps captain who joined EDS in 1968 as a trainee.

"If you worked here, you got experience faster than other places," he said. "You worked on bigger problems. It was just a whirlwind pace.

"We were a young company with young people. It was challenging but easy at that size for an individual to be able to connect what they were doing with the success of the company. That's not always easy to do as you get larger."

That fast-paced, start-up environment was what spurred Mr. Perot's interest in hiring employees with military experience, Mr. Heller said.

"Ross himself had a military background," he said. "His theory was if you get somebody on the backside of their military experience, you're getting someone who's more reliable, more mature.

"It worked really well for the company."

As EDS grew – from hiring, by absorbing the employees in the tech departments at its client companies and agencies, and then, in 1984, by being acquired by General Motors – the workforce included more traditional technology professionals whose résumés included high-powered college degrees rather than battlefield
experience.

Rescue in Iran

Still, EDS retained much of its martial spirit, culminating in 1979, when Mr. Perot organized a group of employees with military backgrounds who volunteered to lead a rescue mission for co-workers trapped in revolutionary Iran.

Mr. Heller said he had a "behind-the-scenes" role in the successful mission.

"I think it just shows an incredible commitment by the people to their co-workers," he said. "We were lucky. Those kinds of things can go a lot of ways. But even so, the preparation that went into it, they helped make some of their own luck."

The GM acquisition turned out to be one of the first big culture clashes for EDS, and Mr. Perot and other top executives left in a buyout in 1986.

Even so, the rescue – and what it said about EDS' culture – made an indelible impression on Ben Trowbridge, a young Marine Corps officer training in North Carolina for a potential invasion of Iran when he heard about the EDS rescue.

"Looking in on the military side, I didn't know anything about technology. I was an infantry officer. But I just thought that was so exceptional, to have that kind of commitment to their people."

When Mr. Trowbridge left the Marines in 1990, he knew where he wanted to work.

"I cold-called my name pretty hard into EDS," he said. "I just decided I was going to work there, and I did."

Mr. Trowbridge worked at EDS on the sales side, and he said the culture he saw from the outside was just as evident from the inside. The company put him in a yearlong training program, for example, before he ever met any potential clients.

He eventually left EDS in 1996 and is now chief executive of Dallas-based Alsbridge Inc., which advises companies on how to pick outsourcing partners such as EDS.

Alsbridge's nonexecutive chairman is Morton Meyerson, former president and vice chairman of EDS and, later, chairman and chief executive of Perot Systems Corp.

Mr. Trowbridge and others agree that EDS lost some of its purpose in the late 1990s, after GM spun the firm off in 1996.

"I think '96 through about maybe a five- or six-year period, they tried to redefine themselves and go a little touchy-feely," Mr. Trowbridge said.

Mr. Heller said growth slowed during that period but began to pick up again at the end of the decade, just as the economy – particularly the tech economy – was about to stumble.

Rough days

"Just looking from the outside, EDS was geared to grow faster," said Mr. Heller, who retired in early 2002.

"They had really ratcheted up. And as that happened, they got burnt some. In 2002, they had some real problems."

EDS went into a near-tailspin as speculation spread that financial losses were putting the company in a precarious position.

Dick Brown, the first chief executive in EDS history to be hired from outside the company, was ousted in 2003 as the stock price languished.

Michael H. Jordan, who previously led CBS Corp. and held senior positions at Frito-Lay Inc. and PepsiCo Inc., was named chairman and CEO, and Mr. Heller returned to EDS as president and chief operating officer.

Mr. Rittenmeyer joined EDS in 2005 and succeeded Mr. Jordan in 2007 as CEO.

The two executives are largely credited with restoring EDS' financial performance, cutting costs and getting the company on solid footing.

Mr. Rittenmeyer said that he felt one of his missions was to keep EDS' legacy and culture from turning into a stubborn refusal to adjust to changing market conditions.

"You should honor people's history," he said. "So I'm very respectful of the fact Ross Perot started this company. But I'm also very cognizant of the fact that he's not here anymore."

Moving more of EDS' work to lower-cost locations outside the U.S. was paramount."The reality is, our clients were getting very frustrated with us," Mr. Rittenmeyer said.

EDS now has about 40,000 workers in low-cost areas such as India and the Philippines, compared with about 1,300 when Mr. Rittenmeyer arrived.
"Not everybody likes it, and I appreciate that," Mr. Rittenmeyer said.

"Those kinds of cultural changes are hard to do, but they have to be done."

If anything, EDS has not moved offshore fast enough, Mr. Trowbridge said, but he credits Mr. Rittenmeyer for stirring EDS out of its complacency.

Question of meshing

It now remains to be seen how EDS and H-P will mesh.

Mr. Rittenmeyer said he shares a pragmatic philosophy with H-P chief executive Mark Hurd that should minimize the number of territorial disputes.

And Mr. Trowbridge said H-P's ability to design and build hardware is a good match for EDS' expertise on the service and implementation side.

Mr. Rittenmeyer acknowledged that there are always unforeseen problems that crop up in a merger as large as the H-P/EDS deal but said those confrontations can be good.

"I would argue that it forces you to revisit what you think are your norms and see if they really do fit."