MACHIAVELLI knew how hard it is to change custom and practice. In The Prince, written 500 years ago, he said there is “nothing more dangerous to manage than the creation of a new order of things”.

The quote has pride of place in the office of Bill Thomas, European head of EDS, the American IT services group, and for good reason. EDS is the biggest provider of IT to Whitehall, employing 20,000 in Britain and with operations that touch many people’s daily lives. Thomas is all too aware of the perils of trying to change the status quo.

Ministers have often used new technology - courtesy of EDS - as a none-too-subtle blind for deeper changes: new policy, for example, or a shake-up of the civil service. When it goes wrong, as it famously did at the Child Support Agency (CSA), the backlash is unpleasant.

EDS was made the whipping boy for the problems, with parliament’s public accounts committee calling it “among the worst public administration scandals in modern times”.

Thomas, a 48-year-old Lancas-trian, is used to the flak. “It goes with the territory,” he said. “We do a lot of projects. Most of them are successful, and they don’t attract many column inches. When they go wrong, people are very interested.”

Despite the public kickings, EDS is still a government favourite. It provides IT for the Department for Work and Pensions, the Ministry of Justice, and is one of the companies behind London’s Oyster travel card. It is also deeply entrenched at the Ministry of Defence.

As well as providing software to plan air strikes in Iraq and Afghanistan, EDS is prime contractor on the ambitious £5 billion Defence Information Infra-structure (DII) project, which involves building a network to link 400,000 users - the most secure of its kind in the world, Thomas claims. EDS is also in talks to become one of the main contractors on the controversial £5 billion identity-card scheme.

Thanks mainly to the government’s appetite for outsourcing, Britain was for many years EDS’s second-biggest market - losing that position only this year when overtaken by India.

Ambitious schemes such as identity cards show the government has not lost its taste for big IT programmes. Thomas said the government had little choice but to turn to specialised contractors.

“Nobody would suggest the Ministry of Defence should build its own aircraft. Yet only a few decades ago the government did own the aircraft industry. The activity has been given to outside companies. It is simple specialisation and division of labour.

“On DII we can bring the skills of 140,000 EDS employees to bear. There is no way the MoD can have that kind of in-house capability.”

Shiny new computers are not the goal of such programmes, Thomas said. “The government is trying to accelerate or implement policy, or improve efficiency. It is not about buying computers.”

He cites the joint personnel administration scheme, which unifies the pay offices of the army, navy and air force, in some cases breaking service traditions that have built up over centuries. It is a mammoth IT task, Thomas said, but one that had much broader goals.

“It happens to be the world’s largest Oracle human-resources system, and producing it is quite tricky in IT terms. But when you get up close, you see that it’s all about enabling the MoD to harmonise personnel management and pay between the three forces.

“It will save about £100m a year, and that can buy a lot of frontline kit. But breaking into the shared values in the army, navy and air force is a very emotional thing to do.”

Thomas came to prominence with work for a private-sector client. He was instrumental in a series of deals with Rolls-Royce, the aero-engine maker. EDS and AT Kearney, then its in-house consultancy arm, helped implement a sweeping reorganisation of the company. It was a contract with a difference - EDS invested upfront in IT, and got paid from the improvements to Rolls-Royce’s bottom line.

A big lesson was what Rolls-Royce called “concurrent engineering” - designing products that not only did the job but were also easy to make and cheap to support in service.

The same applied to government contracts, said Thomas. “In really good government programmes, there is [a clear link] between the design of the policy and the implementation of it. On bad projects, people will come with a plan with no thought to implementation.”

Thomas said Whitehall had learnt from the programmes that had gone wrong. “A decade ago, they understood intellectually that delivery was at least as important as policy. Now, it is not only intellectual, but the execution is there. There are people who have been involved in successful and not so successful programmes, and they know what it takes to get it right.”

While failed programmes are unlikely to stop outsourcing and big IT programmes, Thomas fears they may threaten the scope of the government’s efforts. “The real problem is that there will be a temptation for ministers to be less ambitious in the way they use IT. As a taxpayer, I don’t want them to be less ambitious - I want them to transform public services.”

EDS is now in talks to join the “roster” of five or six contractors that will deliver the controversial identity-card scheme. Thomas recognises the cards are a hot issue, but said the government was likely to spend money on new systems to “manage identity” anyway. “That will happen whether we have cards or not.”

EDS ORIGINS

EDS is still associated with Ross Perot, the Texan businessman who founded the company in 1962 and ran for the presidency as an independent in 1992 and 1996.

Perot’s connection with the group ended in 1984, when he sold Electronic Data Systems, as it was then called, to General Motors. GM merged it with its own IT unit, roughly quadrupling its turnover overnight.

GM spun off EDS in 1996, freeing it to grow rapidly as the fashion for outsourcing grew.

Having hit problems with a contract for the US Navy, the group parted company with chief executive Dick Jordan in 2003. The Securities and Exchange Commission, America’s financial watchdog, then began an investigation of EDS’s accounting policies.

Michael Jordan, who had helped turn round Westinghouse, was parachuted in. He renegotiated the navy contract and sold the AT Kearney consultancy arm. Jordan left earlier this year and was replaced by Ronald Rittenmeyer.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive