IBM Trumps EDS for Ford Motor Contract

By Mark Berniker

(Back to article)

Ford Motor Company has chosen IBM and Dassault Systemes SA to provide software and consulting service in the automaker's bid to integrate its computer design and manufacturing processes around the world.

The contract victory is a major win for IBM and Dassault, which won the deal away from outsourcing rival, Electronic Data Systems. EDS has been the major systems integrator for Ford, and will continue to work with the automaker.

While the specific value of the contract is not known, it is expected to generate hundreds of millions of dollars for IBM in systems integration services and consulting.

The contract victory also solidifies Dassault as a leader in the automotive software design market. Arc Advisory Group estimates that Dassault has close to 50 percent market share of product life cycle management software market for the auto industry. IBM is working closely with Dassault on the marketing of its Catia and Enovia software products for the auto industry.

The Ford deal isn't the first major contract win for IBM-Dassault, just last year the pair won a deal worth close to $800 million with Toyota Motor Corp. IBM-Dassault now have contracts with 22 of the top 30 automakers around the globe.

As part of the deal, Ford is expected to purchase more than 4,000 copies of the IBM-Dassault software that will be utilized by computer designers. For each piece of software IBM sells, it often brings in nearly five times as much in consulting fees.

Ford, the second largest U.S. automaker behind General Motors (and former parent of EDS) is aiming to improve efficiency to boost profits in coming years in its drive to overtake GM. One way it sees of achieving this goal is through shortening design cycles through software innovation.

There is a fierce battle being fought among the gigantic global automakers to find ways to utilize the most innovative software technologies to gain an edge on their competitors.