Deutsche Bank has done very well in its landmark infrastructure outsourcing agreement with IBM, according to Deutsche Bank chief technology officer Clemens Jochum, who says the bank is now considering expanding the partnership. The landmark $2.5 billion, 10-year deal has achieved its expected goals of reduced costs and increased access to new technology, and Deutsche Bank is considering expanding the deal to cover software development as well as data centre infrastructure. Jochum represented Germany's largest bank at the Strategic IT Management conference in that country, and called outsourcing a "very extreme internal auditing of IT costs" because IT requests were assigned specific prices. Before, the IT department strove to accommodate business demands but was not able to control costs. "We can see exactly what drives costs. In the past, IT infrastructure costs were a big black hole," he said. Although the arrangement has produced a few minor hiccups, including a brief interruption in service last year, Jochum said that whereas before associated costs would have been directly absorbed by Deutsche Bank, IBM accounted for the interruption according to a negotiated risk management deal. Jochum said banks need to model their IT production after the more efficient automobile industry, with a focus on process standardisation. Banks should focus on product and service innovation while outsourcing 'commodity' hardware and software responsibilities. Deutsche Bank's contract with IBM is expected to save the bank about $1 billion in operating costs over the 10-year agreement. Copyright 2004 INFORMATION, INC. |
