HP Settles ‘Legacy’ EDS lawsuit With BSkyB

HP has settled a lawsuit for £318m with BSkyB, dating back to 2004, which HP acquired when it took over services company EDS.

Sky announced this week that it reached an agreement with EDS, over damages which were awarded in January. The case began when a CRM project run by EDS over-ran significantly, before the contract was ended in 2002. Sky claimed that EDS had failed to meet the requirements of the contract.

Sky asked for £700 million

At one point, Sky was seeking around £700m in compensation from EDS over the contract which was originally valued at around £48m. HP has agreed to pay damages and court costs and has already made a payment of £270m.

HP is trying to distance itself from the case. A HP spokesperson told The Guardian that the court case was a “legacy issue” as it occurred before HP took over EDS in 2008.

In January Sky was awarded a minimum of £200 million in damages from EDS, after the IT services giant was found guilty by the British High Court of misleading its former client, in order to win over the CRM contract.

BSkyB had selected EDS back in the summer of 2000 in order to provide day-to-day management of a customer relationship management (CRM) project on its behalf. The contract was to design, build and implement an advanced customer service system at BSkyB’s customer contact centres. However BSkyB terminated the deal in March 2002, claiming that EDS had failed to meet its contractual obligations. Sky assumed direct responsibility for systems integration from EDS, and in August 2004 it began legal action against the IT services company.

Speaking to eWEEK Europe UK in February, Nick Mayes, senior analyst at PAC Consulting, said that the case has lessons for companies negotiating outsourcing contracts. “This case does highlight the benefits of taking a rigorous approach to doing due diligence on your potential supplier, of going out and speaking to the references they give, and hearing it from the horse’s mouth,” he said.

Future outsourcing proposals may not be so ambitious, said Mayes.

HP#s current approach to services contracts is to major on simplification, promising to get customers out of “information gridlock” at customers. It is particularly keen to help users replace or switch off mainframes although rivals such as IBM point out that HP’s EDS business provides mainframes.

HP acquired EDS in May of 2008 for $13.9 billion (£8.5bn). On 23 Sept 2009 HP changed the name of the company to HP Enterprise Services.