IBM snags multi-billion dollar global deal with private cloud component



1024px-ABN_Amro_Kneuterdijk-300x225IBM has landed a multi-billion dollar contract to provide a major state-owned bank in Europe with cloud and professional services encompassing key parts of its operations over the next ten years. The lucrative deal marks a major victory for CEO Virginia Rometty as she works to steer the enterprise stalwart back onto a growth course amid faltering demand across the legacy businesses that make up 75 percent of its sales. It also exemplifies the latest twist in IT outsourcing, one which has companies using service providers to get up to speed faster in the cloud.

Revenues slumped four percent to $22.4 billion in IBM’s last quarter owing to single- and double-digital declines across its core hardware, software and outsourcing groups. In contrast, cloud income surged 80 percent on the back of a $1.2 billion investment in infrastructure expansion that the company announced earlier this year, momentum that the newly revealed deal with ABN AMRO Bank N.V. will accelerate.

As the largest financial institution in the Netherlands, ABN AMRO holds significant sway on the global stage with north of $200 billion under management and thousands of branches across more than 20 countries. Modernizing that kind of presence requires a breadth of operations that IBM is a unique position to address as the world’s largest provide of professional services, which gives it a much-needed edge when competing for such massive contracts.

Just as importantly, the company also possesses an expansive product portfolio to support that consultancy muscle. Especially significant is the fact that Big Blue commands a dominant share of the mainframe market, an indispensable advantage in the banking industry, which still relies heavily on big iron for mission-critical workloads. ABN AMRO is no exception.

Amazon has made some serious gains against IBM in the enterprise, most notably snatching a $600 million private cloud deal with the CIA last year, but Big Blue threw the ball back to its court in October with a massive $1.2 billion deal to manage technology operations for German flagship air carrier Lufthansa AG through 2021.

The new contract with ABN AMRO ups the ante another notch. Besides modernizing mainframe infrastructure, the deal will also see Big Blue take over many other aspects of the bank’s global operations, including application support and end-user computing. That’s another requirement that the vendor is well positioned to tackle, especially since rolling out a managed desktop virtualization service last week that allows business workers to access desktop applications from their smartphones and tables.

December 4, 2014

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