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Information Technology Outsorcing Transaction - Halvey K.J.

Halvey K.J. Information Technology Outsorcing Transaction - Wiley Publishing, 2005. - 649 p.
ISBN-10 0-471-45949-6
Download (direct link): informationoutsourcingtransactions2005.pdf
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• Utility-based models. With computing services becoming more “commoditized,” there has been a growing push from outsourcing customers and outsourcing vendors for “pay as you use” or utility-based models. Most industry experts still believe that these models are relatively immature, but many customers are embracing the models in a drive for more flexible pricing. Gartner estimated 15 percent of North American enterprises will adopt
11. "Technology," The Asian Banker Journal, February 6, 2001.
12. McCure, Andy, "European Outsourcing to Catch US Market in 2004," Silicon.com.
6 Ch. 1 Overview of the IT Outsourcing Industry
utility computing services by 2003, and that the market will grow from $8.6 billion in 2003 to more than $25 billion in 2006, with 30 percent of North American enterprises having utility computing arrangements.13
• Renegotiating deals. With many of the large deals signed in the 1990s expiring or close to expiring, the market is experiencing a relatively new trend—the extension or renegotiation of existing deals. The maturing IT outsourcing market has seen some deals being extended, but it has also seen some deals being terminated earlier than originally anticipated. The reasons for early termination have run the gambit from a change in corporate management to an unanticipated merger or sale to nonperformance or unsatisfactory service. A more in-depth discussion of issues that arise in connection with renegotiating and terminating outsourcing transactions is provided in Chapter 15.
1.3 IT OUTSOURCING DEALS
The first companies entering into outsourcing deals were predominantly U.S. banks and financial institutions, but today companies of almost every size and across every industry have outsourced all or part of their IT operations. Literally thousands of companies and government agencies have entered into outsourcing agreements for IT services. Exhibit 1.1 lists public IT outsourcing deals by industry. The data contained in this exhibit has been gathered from annual reports, press releases, and other public information. This list is not exhaustive by any means. It is intended to provide a sampling of the types of deals that customers have been entering into in the last couple of years.
CUSTOMER VENDOR ESTIMATED CONTRACT VALUE (MILLIONS) TERM (YEARS) POINTS OF INTEREST
1. 3Com EDS Manage IT infrastructure
2. 7-Eleven, Inc. EDS $175 7 Full IT package of integration, intelligent storage and full-scale hosting services
3. AAA AT&T $138 3 Networking services
4. ABN AMRO EDS Full range of services, including application hosting, data processing, and back-office processing
5. ABN AMRO Bank N.V. EDS $1,300 5
Exhibit 1.1 IT Outsourcing Deals
13. Business Communications Review, July 1, 2003, "Outsourcing."
1.3 IT Outsourcing Deals 7
customer vendor estimated CONTRACT VALUE (MILLIONS) TERM (YEARS) POINTS OF INTEREST
6. ABB IBM $1,100 10 Information systems infrastructure in 14 countries in Europe and North America
7. ACNielsen EDS Mainframe computers
8. Advantica Restaurant Group, Inc. ACS Data center operations, network management services, support for desktops, and development and maintenance of applications
9. Affiliated Health Services ACS Application software implementation, hardware management, help desk/ operations support, education, desktop and network support, and telecommunications
10. Affiliated Health Services ACS 3 Implementation services application software implementation and support, hardware management, education, data repository and an electronic medical record
11. Agere Systems Hewlett-Packard 3 Manage its data centers and improve its operational efficiencies
12. Air Canada IBM $900 7 E-enablement of Air Canada infrastructure, enhancement of customer service procedures, and new IT-based developments
13. Air China Sabre Holdings Corporation 3 months Extensive IT audit to determine its future IT and applications needs
14. Air Force Center for Environmental Excellence DynCorp Systems & Solutions llc 5 Environmental and IT consulting services
15. Air Force's Central Design Activity DynCorp $20 5 Design, testing, and implementation, business process reengineering, information protection and assurance, software QA, and systems engineering
Exhibit 1.1 (Continued) IT Outsourcing Deals
8 Ch. 1 Overview of the IT Outsourcing Industry
customer vendor estimated CONTRACT VALUE (MILLIONS) TERM (YEARS) POINTS OF INTEREST
16. Air Force's Electronic Systems Center Titan Systems Corporation $29.9 4 Technical and acquisition management support and management and administrative support in the areas of business management, financial management, training, logistics configuration control, and data management
17. Air Force's Electronic Systems Center Titan Systems Corporation $41.5 4 Information technology and program management support
18. Air Force's Electronic Systems Center Titan Systems Corporation $88 5 Sustainment and modernization of a worldwide network of command and control centers, surveillance sensors, and strategic communications systems
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