2 January 2003 IBM Global Services has won a $5 billion outsourcing contract with investment banking giant JP Morgan Chase. The seven year contract was clinched in the teeth of fierce competition from rival EDS.
The deal represents the largest ever outsourcing contract won by IBM, eclipsing its $4 billion, February 2002 agreement with American Express.
Significantly, IBM will deploy its Utility Management Infrastructure technology as part of the deal. This enabled IBM to offer JP Morgan a more flexible, ‘pay as you go’ element to the contract, based on JP Morgan’s actual usage of server resources.
The utility computing technology means that IBM can more easily switch resources between different systems, using centrally deployed server management software.
The deal will cover a substantial portion of JP Morgan’s data processing facilities, including data centre management, help desks and maintenance of data and voice networks. About 4,000 JP Morgan employees and contractors will also be transferred to IBM in the first half of 2003.
The deal follows on from a 10-year, €2.5 billion contract won just a week earlier with Deutsche Bank. This also included a ‘pay-as-you-go’ based on IBM’s utility computing technology.
In this deal, IBM will take over Deutsche Bank data centres in eight European countries and open a major new data centre in the Rhine-Main region of Germany. This data centre will not just provide security and remote management facilities to Deutsche Bank’s infrastructure, but other IBM clients too.
Deutsche Bank chief operating officer Hermann-Josef Lamberti said that the deal would save the bank an estimated EU1 billion over the life of the contract.