Nordic bank hires IBM to revamp and manage IT

IDG News Service - Nordea AB has hired IBM to manage its daily IT operations and to revamp its IT infrastructure, and the Nordic bank expects the outsourcing arrangement to save it money and allow it to devote more resources to its core banking business, executives from both companies said today.
Nordea, based in Stockholm, is the product of the combination of five formerly independent banks, so it has a very heterogeneous IT infrastructure. Consequently, it decided it had to consolidate and standardize its IT infrastructure and make it more homogeneous, automated and consistent, said Nordea's CIO, Jarle Haug.
The bank considered handling the big consolidation on its own but eventually decided to hire an IT services specialist instead, a job that went to IBM because of its experience with such projects, Haug said. "We think IBM will provide us with the competency and capacity to make this transformation come through with lower risk than if we do it ourselves," he said.
Moreover, Nordea liked that IBM agreed to price its services according to usage, instead of charging a fixed, upfront price. Thus, the bank will pay only for the services it uses, allowing it to match the cost of IT to its consumption, Haug said.
In the 10-year deal, which has an estimated value of $2.56 billion, IBM will update and manage the bank's servers, networks, PCs, help desk and storage devices, among other things, said Leif Lindqvist, general manager of IBM Global Services in the Nordic region, which is based in Stockholm. "We'll do everything that goes with the IT infrastructure and take it to another dimension by redesigning it entirely," he said.
To provide the services, the companies have created a still-unnamed joint venture to be staffed with about 900 IT employees that will transfer to it from Nordea, said Erik Evren, the bank's chief communications officer.
Officials declined to provide financial details about the joint venture, including the size of each company's stake in it. However, Haug said the venture won't be capital-intensive for the bank, because most of the investment needed for it will come from IBM. The contract and the joint venture become active on Nov. 1.
The joint venture will be a single-purpose entity, meaning it will provide services only to Nordea. Making sure its former employees were the ones providing Nordea these services was a big motivator in forming it, Haug said. The other option would have been to transfer the employees to IBM Global Services. The joint venture will also house a Transformation and Innovation

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