Posts Tagged ‘IBM’

IBM on board as Westpac bids to become NZ’s leading digital bank

August 21st, 2014

IBM has today announced that Westpac New Zealand has selected the company’s private cloud technology to support its goal to be New Zealand’s leading digital bank.Outsourcing52

The new five year agreement is part of an extensive services and technology contract which includes Westpac migrating some of its business critical IT systems into IBM’s Auckland data centre, enabling enhanced customer service.

The agreement supports Westpac as it embarks on a significant transformation from a traditional bank to one that uses cloud computing enabling it to address key market trends such as social and mobile adoption to influence the way consumers prefer to bank today.

As one of IBM’s long-term strategic outsourcing clients, by adopting private cloud capabilities to develop and test tools within a dedicated environment, Westpac says it will be able to deploy new online and mobile banking services faster and across multiple devices and platforms in response to customer demand.

As customers’ digital footprints expand and the bank’s security demands change, IBM is helping Westpac respond with enhanced online security features, such as the ability to manage identity and access through a single user ID.

Westpac’s Interim Chief Information Officer Jason Millett says IBM’s private cloud platform would further enable increased development of Westpac’s digital capabilities as it responds to customer demands for a more personalised, convenient way of banking.

According to Gartner, by 2016, poor return on equity will drive more than 60 percent of banks worldwide to process the majority of their transactions in the cloud.

“The platform provides a robust and advanced infrastructure enabling a seamless online banking experience across multiple devices,” Millet adds.

“This supports our goal of being New Zealand’s leading digital bank.

“In addition, IBM’s local and global expertise, commitment to work within our regulatory framework, deep knowledge of our business and industry, and responsive commercial models provide a market leading offering that can support our changing needs over time.”

Westpac will also optimise its IT infrastructure by renewing IBM mainframe services, midrange and storage platforms and migrating some services to IBM’s Level 3 data centre providing even greater data resiliency.

To meet Westpac’s optimisation objectives, IBM leveraged its global Research team and Distinguished Engineers who advised on new technology, business processes and IT governance, including more flexible, cost effective and agile approaches to IT service delivery.

“Westpac’s underlying IT systems must operate uninterrupted, be secure and be able to support future needs as customers increasingly engage on mobiles and tablet devices,” adds Rob Lee, IBM New Zealand Managing Director.

“Our relationship with Westpac New Zealand is one of our longest and closest, marked by a high degree of innovation and collaboration.

“We continue to invest in skills and advanced technologies including our cloud solutions to help deliver on their vision to be New Zealand’s leading digital bank.”

IBM has prime responsibility for managing Westpac’s key infrastructure services, under an agreement that was first signed in 2000. In 2013 Westpac became one of the first clients of IBM New Zealand’s Delivery Centre at Unitec in Auckland, employing post-graduate and under-graduate computer science students.

Westpac extended its strategic outsourcing agreement with IBM based on the strength of the relationship and IBM’s ability to bring new innovations such as cloud technology to the IT infrastructure.

IBM New Zealand launched its hybrid cloud in March to offer local customers greater visibility, transparency and control of data security and placement.

This followed an announcement earlier in the year that IBM will invest $1.2billion globally into comprehensively expanding its cloud footprint.

IBM’s global data centre network is key to helping enterprise clients move operations into the cloud in a hybrid model that preserves existing IT investments and connects on premises systems of record with new cloud-based systems of engagement achieving the best of both worlds.


IBM, Veda extend outsourcing agreement

August 20th, 2014

IBM has signed a five-year, multi-million dollar agreement with Australian-listed credit information and analysis firm Veda to extend its existing outsourcing relationship.Outsourcing48

IBM says the agreement with Veda, now includes cloud services as well as the continuing delivery of a “highly reliable and resilient infrastructure”.

“The contract reflects the deep partnership between IBM and Veda, and the value that the partnership has delivered to our business,” said Veda’s CEO Nerida Caesar.

“Being a business based on using data and analytics to provide insights, we are constantly looking at the best way to manage and deliver the most accurate insights to our clients. To this end, we have already deployed one of our systems that supports comprehensive credit reporting (CCR) on IBM’s flexible infrastructure.”

The extended agreement assists Veda’s growth strategy, as it provides a scalable solution to support the company’s introduction of CCR products in response to the credit industry’s most significant reform in recent times.

Included as part of the amendments to the Privacy Act 1988, CCR requires five additional data fields in order to provide a more complete picture of a consumer’s credit activity. Veda expects that the volume and mix of data relating to credit reporting will grow rapidly as companies realise the benefits of CCR.

Jeffrey Rhoda, General  Manager, IBM Australia and New Zealand, said the changes to credit reporting requirements had prompted Veda to expand its relationship with IBM, to support the expected growth of data and analysis that CCR will bring.

“We are excited to support Veda as it navigates through a significant time of transformation within the credit reporting industry. The ability to support clients during phases of critical growth in a complex business environment is what differentiates IBM as the leading infrastructure and cloud service provider,” Rhoda said.

Veda’s customers range from financial services organisations, utility companies and telecommunications providers, with its core product offering being the provision of credit reports in relation to individuals and businesses. It carries credit information on 20 million individuals and 5.7 million commercial entities in Australia and New Zealand.

Veda listed on the ASX in December last year and is continuing to grow its product and market portfolio, with the IBM project a key strategic pillar to support the company’s growth plans.


IT firms may face trouble as delays in outsourcing contracts push deals farther away for cos

August 20th, 2014

Information technology outsourcing companies, including Indian software exporters, could be in for trouble as almost every second contract to be awarded during the first quarter of this fiscal year got pushed back, underlining the choppy demand flagged by software exporters, including Cognizant and Wipro. Outsourcing47

Public sector, financial services and manufacturing clients are taking time to outsource IT contracts as about 40% of these extended beyond expiry dates during the April-June period, estimates London-based IT research firm Ovum.

“The 40% figure is still very high as it is usually 10-20%,” said Jens Butler, principal IT analyst at Ovum, adding that delays were on account of various reasons, including “changing scope, position of the buyer in terms of what they’re looking for, ongoing negotiations and restructuring”.

In monetary terms, more than $2.7 billion of the $13.7 billion of contracts got delayed, making Ovum believe that this could eventually slow down the need for speed and agility that is becoming critical for buyers. “It could become worrisome if it starts to extend beyond a year and the scope or scale of deals changes dramatically,” said Butler. This extension in deals getting closed comes despite the willingness of homegrown IT firms to either pay money upfront or buy assets to swing deals in their favour as they try to remain competitive against the big global players, including Accenture and IBM.

The delays are already making such software exporters jumpy, forcing Nasdaq-listed Cognizant to cut its full-year revenue growth estimate, only the second time ev er in its two-decade history, by 2.5%. Bangalore-based WiproBSE 1.13 % expects business to remain soft in its largest unit–banking, financial services and insurance (BFSI).

“Clients across BFSI space are taking time to close deals, which has caused some hiccups,” Wipro BFSI chief executive Shaji Farooq told ET in an interview last week. Although Farooq remained optimistic that these issues could possibly get resolved by the end of the calendar year, some industry captains believe capital expenditure deferrals are leading company bosses to hold back on IT spending.

“Everybody thinks you start a year and good times will rock and roll,” said Gaurav Johri, head of BFSI at Mindtree. “(Problem is) it’s not coming back to the pre-2007 period. Every CEO will extrapolate its growth. And since there is lack of confidence in that number, every CEO wants to keep a check on budgets,” said Johri.Nonetheless, he said that Bangalore-based Mindtree has not seen any “significant extension” in contracts.

Some experts, however, do not think it is a distress situation yet as they believe clients sometimes delay start times for deal renegotiations due to other pressing business issues.

“Most of these deals are complicated ones and it is not unusual to have deal cycles that can out-run expiry dates on deals,” said Sid Pai, Asia-Pacific president at outsourcing advisory ISG. “Clients can and do use short-term extensions on current contracts while their renewal and/or renegotiation processes are going on. Even in new scope deals, these deal cycles can often run six to nine months, so it is not unusual to see extended deal cycles where there are incumbent providers already.”


IBM Korea restructuring operation

August 19th, 2014

International Business Machines (IBM) Korea is launching another round of restructuring to counter steep drops in profits, officials said Monday.Outsourcing47

“IBM is scaling down its Korean business as the company’s top management believes Korea isn’t an important market itself,” an official said.

The official said that she was asked by IBM Korea’s human resources department whether she would accept a voluntary retirement program.

“This is, at least for me, really nonsense. IBM Korea is forcing its employees to follow a ‘take it or leave it’ rule without any clear explanation on why the company suddenly initiated its protocols to relocate human resources and for restructuring,” said the official.

Last year, IBM Korea sacked some 200 employees. Its Korean operation has recently reallocated between 60 and 80 in its workforce from its software division to its secondary customer call centers.

Some of IBM Korea’s public relations office personnel applied for new positions in another U.S.-based tech company, here.

IBM Korea recently restructured some of its business divisions to respond to worsening business performance here. As of 2013, the company had 2,242 employees in Korea.

IBM insiders say the restructuring is widely expected.

In July, Martin Schroeter, the chief financial officer of IBM responded to a question from an analyst at Goldman Sachs about its second-quarter earnings by saying; “Australia and Korea were slow in the second (quarter). And notably within that, I would say, we saw deregulation in both Australia and Korea within that AP geography.”

This is very rare for Schroeter to directly mention the Korean market as Korea accounted for less than 1 percent of IBM’s global sales last year.

The comments raised speculation that IBM will restructure its Korean operations.

Now, IBM Korea CEO Shirley Yu-Tsui is aiming to complete her “only mission,” to restructure its Korea business. She was given that role in January of last year.

IBM Korea’s financial soundness is weakening. According to data from the Financial Supervisory Service (FSS), IBM Korea reported 1.26 trillion won in sales last year, down 6.9 billion won from a year earlier. Its operating profit fell by 14.7 billion won to 149 billion won.

This is the first time in five years that IBM Korea saw a decline in both sales and operating profit.

“The problem is that IBM Korea is not yet out of its slump,” said another IBM insider, requesting anonymity.

Revenue of IBM Korea’s two earnings caterpillars ― outsourcing and mainframe maintenance ― was nearly halved as it failed to attract new customers.

“IBM is being pressured to secure additional licensing agreements in those two areas. However, things are getting tough,” he said.

For example, Kookmin Bank ― the nation’s biggest bank and IBM Korea’s most-crucial client ― is reviewing the possibility of completely changing its mainframe system to a Unix-based one from IBM’s mainframe due to cost-cutting.

On a related note, the IBM Korea CEO officially sent a letter to Kookmin management to protest the bank’s internal decision, insisting that a change of the bank’s main banking computer system to a Unix-based one was risky.

The CEO allegedly offered a heavy discount if the bank withdrew its plan to drop IBM as a system supplier. IBM was previously sanctioned by Chinese authorities for offering illegal kickbacks to its business partners and some decision-makers in return for favorable treatment.

Now, IBM Korea is being investigated by the Fair Trade Commission in Korea as Kookmin said IBM Korea failed to follow through on a promise to lower service prices.


IBM scores five-year tech infrastructure deal with Ghana’s Fidelity Bank

August 8th, 2014

At the U.S. Africa Business Forum in Washington, D.C today, Ghana’s Fidelity Bank announced its choice of IBM (NYSE: IBM) to manage its technology infrastructure and services. The five year deal will help the bank deliver advanced customer services and secure its reputation as a dynamic financial services institution in West Africa.

Currently one of the largest banks in Ghana, Fidelity Bank Ghana Limited is seeking to enhance its operational efficiencies as it embarks on a new strategic direction, developing growth plans and strategies for new markets, products and services.

Fidelity Bank pioneered agency banking in Ghana, contracting third party retail networks called Fidelity Smart Agents to provide services on its behalf, with the objective of offering the full benefits of its services and products to the unbanked and under-banked in the country.

Fidelity Bank was licensed by the Bank of Ghana (BoG), the local industry regulator, in 2006; and has made tremendous strides in the past 7 years to become a Tier1 Bank. The quality of its product offerings and its high professional standards has propelled its franchise into a leading Ghanaian brand. The bank now has a balance sheet of USD $1billion (approx.).

Fidelity Bank’s choice of IBM to manage the administration and governance of its technology assets and operations will further entrench its position as a leading, financial institution in West Africa The aim of the technology management services deal is to ensure stability in the bank’s operations nationwide and help drive its projected exponential growth, as it seeks to become one of Ghana’s top 3 banks in the next 5 years.

To support the bank’s goals, IBM will combine local and international expertise, including round-the-clock technical support from IBM’s international Global Delivery Centers to ensure the bank achieves cross-channel integration and a seamless customer experience across all its touch-points. The IBM-managed services will cover a broad spectrum of the bank’s IT functions, including management of its server, security, storage, networks, end user services, branch IT support, ATM infrastructure support andnd datacenter services.

Ghana is one of Africa’s fastest growing economies, according to the World Bank.

“Our bank enjoys an exceptional reputation that results from the dedication and hard work of our employees and our incomparable products and services,” said Edward Effah, Managing Director, Fidelity Bank. “In the rapidly changing Ghanaian banking industry, with far more players and competition than ever before, consumers are entitled to expect benchmark service and protection from these unique market challenges. It is my belief that our partnership with IBM will enable us to deliver and exceed these stakeholder expectations.”

The Ghanaian lender earlier chose IBM’s datacenter solution for a successful retooling and upgrade of its technology assets.

“The economy is going through a unique phase in its evolution and increasingly we are seeing that the appropriate deployment of technology solutions and services in the nation’s financial services sector will be key to boosting the growth momentum already achieved in the sector and by extension in the macro-economic environment,” said Joe Mensah, Country General Manager, IBM Ghana.

The list of banks around the world turning to IBM for support continues to grow. Whilst 70% of the world’s data is managed on IBM systems, 95 of the top 100 banks worldwide use IBM business or technology services to run their business. IBM has also announced more than 20 banking deals throughout Africa over the last five years, with Kenyan, Ghanaian, Nigerian and Congolese banks turning to IBM for world-class IT solutions. In Nigeria, IBM plays a significant role in the ongoing reforms in the financial services sector. 80% of Nigeria’s banks now run on IBM’s enterprise server architecture.

IBM has a long history in Africa, and is taking its role as a technology leader seriously, helping to boost the capacities of Africa’s people and institutions. Just last year, IBM opened its first African Research Laboratory, the 12th globally and part of IBM’s $6 billion annual spend on research alone. In the past 5 years, the company has set up offices in Angola, Mauritius, Tanzania, Senegal, Ghana, Nigeria and Kenya and now has more than 20 subsidiaries on the continent.

“Changing economic conditions and oversight regulatory requirements are turning old arguments against outsourcing upside down as organizations seek ways to cut costs. In West Africa, the need for organizations to focus on their core business competencies while outsourcing their IT challenges to a trusted third-party service provider, may be a game changer to reduce overall operating cost. Fidelity Bank’s decision to go with IBM in this huge IT Outsourcing deal will definitely send a strong signal to the banking sector that IT outsourcing is the way to go,” said Bola Adisa, Country Regional Manager, IDC West Africa.

A robust IT operating environment managed by IBM will help Fidelity management concentrate on Business Strategy and enable the bank to pursue its aggressive growth strategies.


Why Microsoft and IBM Jumped

July 21st, 2014

It was generally a good week for the S&P 500, which edged 11 points higher as earnings season has been generally positive so far. S&P tech giants Microsoft and IBM were worth a closer look this week. Outsourcing29

Job cuts and Intel results driving enthusiasm for Microsoft
Microsoft, the software giant well known for its Windows operating system and Office productivity suites, announced that it will lay off up to 18,000 of its 127,104 employees. Approximately 12,500 of these positions will be from the software giant’s freshly acquired Nokia handset division.

Investors were pleased with this announcement, driving shares up by as much as 3.7% during Thursday’s trading session. Note, however, that Bloomberg reported these rumors on July 15 and Nomura’s Rich Sherlund had issued a note on July 11 claiming that layoffs were imminent, so this headcount reduction may have already been baked to some extent into the stock.

Further, chip giant Intel reported results that showed strength in the business PC space as well as the datacenter. This bodes well for Microsoft, as it is not only exposed to the PC side of things with Windows and Office, but it is also exposed to the datacenter with its multitude of server- and cloud-based products, such as Windows Server, SQL Server, and Azure.

Microsoft is slated to report its third-quarter results after the close on July 22.

IBM still a cash-generating machine
Technology giant IBM reported its earnings results after the close on Thursday. Revenue came in at $24.36 billion, edging out analyst consensus by $230 million. Earnings per share was $4.32, beating consensus by $0.03. Full-year earnings per share of at least $18 was reiterated, pushing past the $17.87 consensus.

While revenue growth for the technology giant has been elusive, with revenues down 2% in the most recent quarter (1% excluding the company’s divested customer-care outsourcing business), the company managed to drive diluted earnings-per-share growth of 42% year over year and net income up 28%. This net income growth appears to be driven by lower operating expenses (down 14% year over year) and slightly higher gross profit margins. Earnings-per-share growth outpaced net income growth, as the share count dropped 9% from the year-ago period because of buybacks.

Though IBM will eventually need to return to revenue growth if is to drive net income up meaningfully in the longer term (cost-cutting only takes you so far), the stock isn’t exactly priced for growth at just under 11 times this year’s expected earnings. Further, the consistent and aggressive buyback program will help drive earnings-per-share growth even if net income remains flat.

IBM’s shares finished the week up 2.4%.

Leaked: Apple’s next smart device

Apple recently recruited a secret-development “dream team” to guarantee that its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are even claiming that its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts that 485 million of these devices will be sold per year. But one small company makes this gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors.


IBM Needs to Rev Up Revenue

July 21st, 2014

We maintain our Neutral rating on IBM as the fundamentals behind the business remain challenged. Our fair-value estimate is $190, lowered from $202, based on 9.5 times our fiscal 2015 non-GAAP earnings-per-share estimate.Outsourcing28

IBM  has struggled to grow over a number of quarters. The pattern of revenue deceleration puts added pressure on margin-expansion, a key factor in hitting long-term earnings targets. A return to consistent revenue growth and execution (solid footing) will be necessary to justify multiple-expansion from present levels.

Second-quarter results were slightly better than expected. Revenue came in slightly above consensus driven by better-than-expected hardware, which was down 12% year-over-year as System z, System x and Storage declines decelerated. Services grew 1% year-over-year excluding the Business Process Outsourcing (BPO) sale and including 1% growth contribution from SoftLayer while backlog was down 1% year-over-year (signings down 33% year-over-year attributed to difficult comp with signings expected to grow in the third quarter). Application outsourcing was down 9% year-over-year (consistent with last quarter) reflecting pricing pressure and a reduction in projects which contributed to Global Business Services (GBS) margins declining and an overall margin miss. Traditional package application implementation was a headwind for services. Software revenue was flat year-over-year with management guiding to mid-single-digit growth over the next two quarters. The negative results in Services are company-specific with IBM’s renewals being broken up into smaller pieces.

For fiscal 2014, GAAP EPS guidance remains at least $17.00 and non-GAAP EPS guidance remains at least $18.00. For fiscal 2015, management continues to expect at least $20.00 in non-GAAP EPS. Management guided to single-digit EPS growth in the third quarter and double-digit EPS growth in the fourth quarter. For fiscal 2014, we lowered our non-GAAP EPS estimate to $17.82 from $18.05 which reflects a lowered non-GAAP pretax margin estimate (23.0% lowered from 23.5%) on the miss versus our estimate in the second quarter partially offset by a lowered share-count estimate. For fiscal 2015, we lowered our non-GAAP EPS estimate to $20.05 from $20.21 on a lowered non-GAAP pretax margin estimate (24.4% lowered from 24.8%).


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