Conglomerate Eyes $35M Savings in Supply Pact

FRAMINGHAM (04/10/2000) - Zurich-based conglomerate ABB Ltd. hopes to save $35 million in information technology costs over the next three years by using its global presence and purchasing power to drive deeper efficiency gains and economies of scale.

The company last week signed a $250 million supply and service agreement under which it will lease about 75,000 desktop PCs, 25,000 laptop computers and 9,000 PC servers from IBM during the next three years.

ABB offices in 80 countries will be able to buy preapproved products directly from IBM Corp. via a Web-based procurement system on ABB's worldwide intranet.

The arrangement will help ABB cut procurement costs and get better prices on products and services from IBM, said Thomas Schmidt, an ABB corporate spokesman in Zurich. It will also let ABB standardize its PC hardware and software platforms globally, Schmidt said.

"ABB is a very decentralized [group], with more than 1,000 companies in 100 countries," Schmidt said. The PC standardization project is "one of the measures we have taken to impose global processes on the group," he added.

Having a standard hardware and software environment will also make it easier for ABB offices to communicate with one another and to deploy global e-commerce applications, Schmidt said.

"This agreement is an important first step in making us faster, more efficient and more responsive," ABB CEO Goran Lindahl said in a prepared statement.

IBM's responsibilities as the sole contractor for the project include leasing and financing, hardware delivery and installation, asset management and support services.

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