IBM, Telefonica in $90M ‘On-Demand’ Pact

By @NY Staff

IBM Corp. has struck a two-year, $90 million deal with Spanish telecommunications provider Telefonica Data USA for data backup services on demand and by the gigabyte.

The contract calls for IBM to deliver “business continuity services” to Telefonica’s US division, based in Miami, which in turn would offer the services to its customers, and priced by the gigabyte.

In addition to the data backup systems, IBM is providing hardware such as servers and software to Telefonica.

The agreement is another step in IBM’s march toward offering on-demand services to customers, as its efforts in grid computing and Web services start to take shape. Although it would be premature to label this contract a grid computing example, it is an early example of IBM’s efforts to provide utility-like computing to customers and help save them internal IT costs, said IBM spokesman Jim Larkin.

In this case (IBM) is acting as a backbone to Telefonica, which is offering the services directly to their customers, he said. “What Telefonica did in coming to IBM was different than typical IT-outsourcing encounters. It asked for services expertise to support new on demand offerings that they wanted to provide over the Internet to customers,” he said.

IBM said its data recovery and backup products would be deployed in its Internet data center in Miami. Telefonica Data USA also maintains offices in New York, Chicago and Houston. With over 150,000 employees and more than 73 million customers, the company is among the largest communications providers to Spanish and Portuguese-speaking countries.

Amtrak Outsourcing to Save $85 Million

In related news, Amtrak is looking to cut $85 million from its cost structure over a seven-year period through a $229 million outsourcing agreement with IBM.

The contract calls for IBM’s global services division to provide IT support for the rail line’s reservation system, including business recovery services, help desk and desktop support services, and voice and data networks.

Amtrak said it awarded the new contract to IBM after an in-depth evaluation of its computing infrastructure. The two already have an existing IT services relationship. The new deal brings their contracts for outsourcing to about $330 million.

As part of their agreement, Amtrak and IBM said they would start marketing Amtrak’s Arrow reservation system to other transportation companies. The system is able to process as much as 3,300 transactions per minute via the Web, telephone, and ticket counter channels.

No new employees will be added to IBM’s employee ranks as a result of the most current arrangement, an IBM spokesperson said.

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