Big On Demand Pact for Big Blue, Nordea

IBM has entered into a 10-year, U.S. $2.57 billion information technology joint venture with Nordea, the Nordic banking group that is also a leading online banking provider.

The project will involve the transformation and consolidation of the banking group’s overall IT infrastructure into an on-demand architecture.

“This partnership will facilitate a large transformation process to
centralize our IT production, and thereby reduce IT costs while enabling us to focus more strongly on core business”, said Markku Pohjola, deputy group CEO for the processing and technology division at Nordea.

The Nordea Group is one of the leading financial services in the
Scandinavian region, and is involved in retail banking, institutional
banking and asset management activities. The company has close to 11 million customers, and more than 3.5 million Internet banking customers.

The companies said 900 people will be employed by the joint venture and that it would entail two physical sites in Sweden for security and resilience reasons.

“We will transform what they have today into a resilient, flexible infrastructure, which will give Nordea access to resources, such as servers, and they pay for what they use, and therefore can save a lot of money,” said Leif Lindquist, IBM general manager of Global Services for Nordic Region.

Nordea also plans to invest in excess of $30 million in the venture during the fourth quarter of 2003.

For its part, IBM plans to facilitate the consolidation of many of Nordea’s locations into two centralized sites, and will standardize its desktop and network infrastructure.

The deal also calls on IBM to assist Nordea in automating a variety of essential IT tasks, including resource provisioning, asset tracking, workflow scheduling and real-time infrastructure monitoring.

“One of the biggest challenges for them is how many desktop workstation, mobile computers and servers they have, where are they, are they functioning at maximum efficiency and our technology allows us to automate and provide remote diagnostics,” Lindquist said.

After completing the transition to the on-demand model, IBM and Nordea are expected to marshall their resources in an effort to improve performance and achieve greater cost savings.

“Our on-demand system will allow Nordea to automatically control their assets, giving them far more flexibility to turn on, and turn off various aspects of their IT infrastructure,” Lindquist said.

Lindquist said the Nordea pact is the biggest deal in the Nordic region to date and the third biggest on-demand deal, behind our contracts with American Express and JP Morgan Chase outsourcing arrangement.

IBM’s Nordic group also has concluded IT deals with Electrolux, Finnair and Ericsson in 2003.

The Nordea contract is the latest victory for IBM Global Services, which has successfully sealed e-Business On Demand deals with Avaya , Boeing , Equifax , Proctor & Gamble and Raytheon in recent months.

According to recent research from IDC, IBM currently hold a lead in the IT outsourcing market with a 22.4 percent worldwide market share, followed by EDS and Computer Sciences Corp. at 16.2 percent and 5.6 percent, respectively.

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