HP extends outsourcing deal with bank

Hewlett-Packard (HP) will continue to manage IT outsourcing tasks for the Canadian Imperial Bank of Commerce (CIBC) under a renegotiated deal.  

The companies had agreed in 2002 to a seven-year, $1.5 billion outsourcing agreement. The new deal renegotiates that contract to add $700 million and four additional years, bringing the combined value to $2.2 billion over 11 years, HP spokeswoman Natalie Wallace said Friday.

Under the contract, CIBC will manage its own desktop support infrastructure, help desk and network services for 37,000 employees located in 1,061 branches.

HP will continue to support the bank’s enterprise infrastructure, including Internet banking, branch tellers, point-of-sale, wire payments, fraud detection systems and CIBC’s 3,800 automated banking machines.

HP will also continue to manage the data centers and network infrastructure, host and midrange transaction processing, application services, operating systems, storage and desktop messaging.

The deal is a key accomplishment for HP’s services division, which has seen a lot of change in recent months.

In June, HP named a new head of the division’s managed services business unit. And on Tuesday, the company said it would acquire Mercury Interactive Corp. for $4.5 billion.

Those changes will allow HP to keep up with rapid changes in the companies to whom it’s trying to sell managed services, from the banking sector to telecommunications, manufacturing, consumer products and utilities, said Pablo Sanchez-Lozano, senior vice president of the managed services division at HP, of Palo Alto, California.

HP began managing infrastructure services for CIBC in 1998. Since then, bank users have demanded new technologies such as Internet banking, greater use of bank branches and cash machines instead of main offices and a greater need for security such as fraud detection, he said.

HP meets those changes with its portfolio of servers, storage, software and services. It will meet changing demands by using technology from acquired companies, including Mercury and Peregrine, Sanchez-Lozano said.

In acquiring Mercury, HP gained new strength in application management, application delivery, IT governance and service-oriented architecture governance, the company said.

In September 2005, HP bought Peregrine Systems for $425 million, gaining asset management technology such as hardware procurement and lifecycle management.

Those acquisitions have sparked a race between HP, CA and IBM to see who can put together the most complete enterprise information management offering, analysts said. As hardware profit margins fall and companies consolidate data centers, those rivals have turned to IT management services to boost their bottom lines.