IBM scores R1bn deal

IBM SA has won a 10-year contract with South African container and break-bulk shipping company Safmarine Container Lines, to transform and manage its entire IT infrastructure.

"It`s a full scope outsourcing deal," explains Mteto Nyati, global technology services executive for IBM. "It is worth about a R1 billion."

The arrangement will see 159 employees of Safmarine Computer Services (SCS) - previously a division of Safmarine - move to IBM`s global technology services arm, he adds.

Under the agreement, IBM will run Safmarine`s data centre operations, provide disaster recovery services, and manage server, storage and desktop systems.

Since SCS is no longer in operation and its employees have been transferred to IBM, the deal effectively equates to a takeover, requiring Competition Commission approval. However, Nyati is confident there will be no objections from the commission: "We will hear from it in about two weeks - but it is a pure formality," he says.

Safmarine also has a small office in Belgium, the legacy of a strategic acquisition of 49% of a Belgian shipping line 15 years ago. Nyati says the outsourcing deal will include the management of IT in Belgium.

"It makes business sense for [IBM], and for Safmarine too, since we are able to deliver cost savings to them - dramatically reducing their costs of running IT."

Richard Downing, CIO of Safmarine, says the shipping company expects to see "double-digit" cost savings over the period of the deal as a result of the agreement.

"Aside from the cost savings, we are able to tap into IBM`s best technology research, practice and industry knowledge," he says.

SCS and IBM have enjoyed a close working relationship for over 20 years, notes Downing, adding this was a key factor in selecting IBM as Safmarine`s outsourcing partner.

"IBM was the only bidder," says Nyati. "I think it is because of all the investments we have made in the past two years to build our capabilities in SA."

At the beginning of June, Nyati indicated IBM expects to secure almost R2 billion in new South African business deals this year.

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