IBM: 10-Year, Multi-Billion Dollar Deal Offers Glimpse of Future

IBM said its 10-year, multi-billion dollar partnership with UniCredit is a look at IT deals to come for Big Blue.

IBM said its 10-year, multi-billion deal with UniCredit is representative of the kind of services deals the giant systems maker expects to see over the next several years.

In a call with the press to discuss the deal announced July 18, Dennis Quan, vice president in IBM SmartCloud Enterprise in the company’s Global Technology Services unit, said this partnership, which brings new analytics capabilities and a cloud model to UniCredit, is indicative of the future of IT deals for IBM.

“It’s a great example of how the outsourcing business is evolving,” Quan said. “We start with sourcing, we move to cloud and we partner with IBM Research. This is an early example of where we see sourcing going.” He said IBM will enhance installed legacy infrastructure with new technologies such as cloud, mobile and analytics.

IBM announced a multi-billion dollar, 10-year agreement to transform the IT infrastructure that supports all of UniCredit’s commercial and private banking activities in Europe. The goal is to provide UniCredit with new efficiency and flexibility with the introduction of new service models and a cloud-based infrastructure for its data centers. As a result, UniCredit clients would be able to access new and innovative services that meet the growing demand for sophisticated financial services in Europe, such as mobile banking, Quan said.

The agreement will include the creation of a joint venture between UniCredit Business Integrated Solutions – the global service company of UniCredit – and IBM, which will have employees in Italy, Germany, Austria, Slovakia and Czech Republic of both companies. With the combination of new skills applied to the banking industry, the new company is positioned to contribute to reshaping the industry in Europe, IBM said. As part of the agreement, the company will market and deliver IT infrastructure services not only to UniCredit, but also to other companies and institutions, IBM officials said.

Moreover, IBM and UniCredit will establish a Value Creation Center that will aim to harness innovation to provide service to clients on a continuous basis. The center will monitor trends in the banking and IT industries and identify emerging disruptive technologies to be rapidly introduced into UniCredit’s infrastructure.

Cloud analytics will make it possible for UniCredit to better predict and understand trading in financial markets, manage spending and provide the most innovative customer solutions, IBM said.

“UniCredit’s innovation-driven approach to sourcing reflects changing motivations in the strategic sourcing marketplace,” said Erich Clementi, senior vice president of IBM Global Technology Services, in a statement. “When making sourcing decisions, forward-thinking organizations like UniCredit are moving beyond basic needs like cost-cutting to higher-order business outcomes such as growth, competitive advantage and, of course, innovation.”

Big Blue officials said major organizations that are leaders in world markets choose to go into partnership with IBM to access innovative technologies to acquire necessary capabilities and expertise. According to the IBM Center for Applied Insights study, "Why partnering strategies matter," involving more than 1,300 business and IT sourcing decision makers worldwide, organizations that have made that shift are outperforming on a host of financial measures, including revenue and gross profit growth.

“Clients see the potential of cloud, big data and analytics,” Quan said. “They see the value but don’t know where to start – so they need an innovation partner.” Quan said IBM is increasingly becoming that partner to customers in mature markets like Europe and in emerging markets around the world.

During a July 17 call with analysts to discuss IBM’s second quarter earnings, IBM's senior vice president and chief financial officer, John Loughridge, said IBM inked 15 deals worth more than $100 million in the second quarter of 2013. The UniCredit deal was among those, Quan said.