American Express signs $4B services pact with IBM

American Express Co. has signed a US$4 billion, seven-year contract with IBM Corp.'s global services unit, which will assume management of nearly all of American Express' IT operations.

Around 2,000 American Express IT employees will be offered comparable positions at IBM as part of the technology operations transfer, which takes effect March 1. Fewer than 20 positions will be cut as a result of the contract with IBM, and 100 employees will remain with American Express to oversee the company's IT strategy, said American Express spokeswoman Molly Faust.

IBM will take over provisioning and management of American Express' computer systems, from mainframes to desktops, and will handle the company's Web hosting, database administration and help desk operations. American Express will continue charting its own IT roadmap, Faust said, while IBM carries out the company's day-to-day technology work. American Express estimates that it will save several hundred million dollars over the life of the contract, which carries extension options.

American Express approached several vendors, whom Faust declined to name, about the services contract around a year ago. A modified request for proposals went out in April, and in August American Express began reviewing responses. The events of Sept. 11 delayed the company's decision, Faust said.

IBM was selected both on a cost basis and because of its "world-class, on-demand technology solutions," Faust said. IBM's flexibility, extensive product portfolio and economics of scale were points in its favor, according to American Express.

American Express will begin transferring its U.S. operations work to IBM in March, with the transfer of IT operations in more than 20 international markets beginning in May.

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