Heads turned when the Canadian Imperial Bank of Commerce announced this fall it had signed a seven-year, $1.5 billion (U.S.) outsourcing agreement with HP Services, the largest services contract in HP's history. After all, these outsourcing mega-deals — in which a company like CIBC turns to a services provider to manage some or all of its computing environment — used to routinely go to HP's competitors. Not any more.
Under the agreement, HP Services will manage a significant portion of CIBC's technology infrastructure, ranging from desktop PCs to midrange servers to mission-critical systems and networking gear.
The decision is a huge one strategically for CIBC, one of Canada's largest banks, with 8 million retail banking customers and 8,000 corporate and investment banking customers. Because information technology plays such an important part in CIBC's business, hp.com decided to take a closer look at CIBC's decision.
Mike Woeller, a CIBC senior executive vice president and its chief information officer, said the agreement "lets us focus on what we do best — providing our customers secure and reliable financial services." CIBC can now focus its capital and its management time on its core banking business, yet "our customers can rest assured that the IT infrastructure supporting our financial services will be managed by the experts from HP Services," he added.
Trust was key
According to Woeller, a key point in HP's favor was its track record working with CIBC since 1998, when the two companies formed a joint venture called INTRIA-HP, which provides mission-critical outsourcing to a number of large North American companies. "Over the last four years, people from the two companies have gotten to know each other really well," he said. "Our four years working with HP have put us in a position where we really trust HP to deliver the infrastructure services we need."
An interesting facet of the agreement is that CIBC's technology environment consists of a mix of hardware and software technologies from a wide range of vendors, not just HP gear. For example, it includes MVS and HP NonStop systems in the data center, IBM AS/400 midrange servers, and other servers running Windows and variants of the Unix operating system from HP, Sun, and IBM.
Besides having HP Services manage this mix of technology, there are other pluses for CIBC. HP Services will provide a single point of accountability for the services covered under the agreement, as well as consistent service levels, improved billing, and more predictable IT costs. All are likely to make a busy CIO reach less often for the aspirin bottle.
Gaining top technical talent, key clients
At the same time, the two companies announced that HP is buying CIBC's 51 percent interest in the INTRIA-HP joint venture. (HP already owned the other 49 percent.) HP's decision to buy the rest of the joint venture "dramatically expands" HP's outsourcing capabilities in North America and adds numerous clients to HP's portfolio, including GM, Delphi, and Halliburton, explained Ann Livermore, executive vice president, HP Services.
As part of the agreement, HP will acquire about 1,280 IT professionals, related technology assets, and two data centers in Toronto.
"To be a large services player, we have to deal with whatever is in our customers' environment," Livermore said. "Particularly with large outsourcing contracts, there is always a variety of technology that is part of those contracts. Signing large contracts like this helps expand our multi-technology skills because we bring in people from our customer's environments with deep expertise in areas other than HP technology.
"In this case, we're adding employees with deep knowledge of how to run IBM mainframe, Himalaya, and Solaris environments, as well as AIX and AS/400 systems. Some of the best IT professionals in financial services are joining HP as part of this agreement," Livermore added.
Both the services contract and the acquisition went into effect in November.
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