CPR inks outsource contract with IBM

TORONTO (12/04/2003) - Canadian Pacific Railway (CPR) and IBM Canada Ltd. announced on Tuesday a multimillion-dollar, seven-year agreement which will have IBM operating and enhancing CPR's railway infrastructure.

CPR -- which has come a long way since its first cross-country rail link in 1885 -- listed reasons including wanting to focus more on the customer side of its business, and wanting to take advantage of IBM's Center for Transportation Innovation as the basis of its decision outsource its IT infrastructure.

Allen Borak, vice-president of information services at CPR in Calgary, said during a conference call that over the past five years the company has completely renewed its suite of applications and IT infrastructure, and is now ready to let IBM take over.

"We are now taking the next important step, one that will enable CPR to harvest its IT to derive maximum value from it for our customers and for our shareholders," Borak said.

He added that CPR is excited to be able to use IBM's Center for Transportation Innovation in Bolder, Colo. -- which is included in the C$200 million (US$154 million) contract -- and hopes to derive expertise from the center to reduce its costs, make its assets including railcars and locomotives more productive "and find new opportunities to enhance services for shippers."

Ed Kilroy, president of IBM Canada in Markham, Ont., said this agreement between the two companies goes beyond traditional outsourcing and reflects a Canadian and worldwide trend. "Customers want more than just a technology company to provide technology support, they want a business partner with deep industry knowledge and expertise," he added.

Kilroy said that with its acquisition of PricewaterhouseCoopers last July, along with its Centre for Transportation Innovation, IBM is equipped to give companies more than just technology support.

"CPR will benefit from the innovative business solutions developed at this center, leveraging the deep industry expertise of highly skilled professionals from all parts of the IBM organization including IBM research, IBM Labs and IBM Business Consulting Services," Kilroy added.

He said the center will look at initiatives including: building customer loyalty; enhancing CPR's customer experience and innovative ways to make it easier for companies to transport goods by rail; to enhance the railway's operations such as the optimal use of CPR's railcars and locomotives; and to support CPR's initiatives to lower distribution costs by simplifying management of its supply chain.

The CPR employees that have lost their jobs because of the outsourcing agreement have been offered an equal contract with IBM Canada, Borak said. He added that these 100 or so employees are not included in the 820 workers that CPR announced earlier this year are being laid off.

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