ABN Amro re-signs IBM for 10-year, multibillion-euro IT contract

ABN Amro has extended its multibillion-euro outsourcing deal with IBM by another 10 years.

Under the first €1.5bn deal in 2005, 1,500 people in IT lost their jobs when the bank outsourced most of its IT to the global outsourcing arm of IBM.

At the time, IBM took over the management of the datacentres for the bank's commercial and consumer clients, private clients, asset management, and new growth markets.

IBM also supported the bank’s mainframes – IBM, HP and Sun Microsystems Unix servers – and iSeries servers, together with EMC and IBM storage devices. IBM used variable infrastructure pricing was to charge for the IT infrastructure.

This contract was later extended in 2010. In this contract, IBM was taken on to implement a standardised end-user computing platform to support the bank's way of working. Standardising the platform will enable the bank to communicate faster internally and with clients.

Under the new agreement, IBM will implement and manage a private cloud environment for ABN Amro. According to IBM the private cloud will enable the bank to improve service quality, drive greater operational efficiencies and provide new and innovative products for its customers.

By the time this contract is up for renewal, IBM will have worked with the bank for almost two decades.

Given the pace of change in banking, a 10-year contract may seem somewhat restrictive. And the IT industry is almost unrecognisable since ABN Amro signed the original outsourcing deal.

Commenting on the length of the IBM deal, a spokesman for the bank said: “ABN Amro and IBM negotiated a contract that will be up for the challenges in banking for the next 10 years."

Lee Ayling, a partner at KPMG, said: "Sometimes if things are working and you have other things on your plate – you might as well stay with the supplier you know."

He said most large-scale contracts across all sectors are being fragmented. "I believe ABN has other suppliers there, so there is competition."

Last month, German airline Lufthansa confirmed a €1.25bn seven-year outsourcing contract with IBM, to reduce IT costs by €70m a year.