TORONTO (11/20/2003) - IBM Canada Ltd. signed a five-year, C$92.5 million (US$71 million) outsourcing agreement with one of western Canada's largest financial institutions, ATB Financial, whereby IBM will be supporting elements of ATB's infrastructure and some banking applications.
This, according to ATB, will include supporting mainframe operations and applications, desktop support, help desk and its server infrastructure -- including both office services and computing platforms for key applications.
"We didn't create a business case that was motivated by cost-cutting," said Joe Leuwer, vice-president, IT at ATB in Edmonton. "What we were motivated by was a QOS (quality of service). ATB is in an interesting position from an IT point of view because we are a large enough institution to look for world-class solutions. But from an IT perspective we aren't so large that we have critical mass in all the different areas where we need expertise to do a job well."
ATB has about 600,000 customers in 240 communities through 145 branches, 129 agencies and one customer contact center. It also has 226 automated banking machines (ABMs) across the province.
Leuwer explained that rather than manage a litany of specialists in a fractional way where some are only needed during certain times of the year, the company chose to draw on the specialities of IBM -- not for the first, but for the second time. The company's previous five-year contract with Big Blue had just expired.
Before ATB renewed its agreement, Leuwer said the company spent a year going through an evaluation process with third parties to make sure they were getting a good price and QOS.
"After we had gone through that exercise what we found -- not surprisingly -- was that the pricing we got from IBM was competitive, and that for the most part, the business was receiving the types of services they needed," Leuwer said.
The new agreement is similar to the previous one, but with a couple of adjustments.
ATB made changes so it is more in control of its security infrastructure, Leuwer said. During the first agreement, the company improved its own ability for setting security strategy and direction, he explained. In 1998, security wasn't as big of an issue as it is today, he said, and the company decided it wanted to have more internal specialities in that area.
In both the mainframe and server arenas ATB has added service level measures to assess performance, but hasn't changed who is doing the actual work.
Finally, Leuwer said ATB wanted to have more control over strategic planning -- the evolution of its underlying technologies and the way these technologies serve the business.
"It's a huge focus for us because ATB changes so rapidly. Therefore, it is necessary for us to devote more time to looking at each of the different platforms and project where they are going to end up, based on what our business plan tells us are the goals for the enterprise in the next few years," he explained. "Then we make decisions about technologies and tools that will help us get there."
Internally, ATB also handles the IT work involved in business analysis that translates business requirements into technology-oriented solutions, and the business-facing responsibilities.
However, the company does rely on companies other than IBM for outsourcing services. Telus Corp. handles ATB's network and hosts its Internet banking solution. Pangaea Systems Inc. does application support for ATB, while Celero Solutions takes care of ATB's ABMs.
This was not the only big bucks outsourcing agreement to make news in Canada this week. On Monday, EDS Corp. and the Canadian Imperial Bank of Commerce (CIBC) signed a US$71 million extension of their current US$156 million business process outsourcing services agreement.
With this deal EDS, based in Plano, Tex., will be providing a human resources portal for CIBC's 37,000 employees and 9,000 retirees, where they can access information about their benefits, payroll, workforce administration and compensation management.