InformationWeek

September 22, 1997

Digital Lands Outsourcing Contracts

Deals with Perkin Elmer, Dow Chemical, and GE Aircraft add up to $165 million

igital Equipment Corp. has inked three selective outsourcing contracts, with Perkin Elmer Corp., Dow Chemical, and GE Aircraft, valued at a total $165 million. The deals create new business relationships for Digital, as well as extensions to existing partnerships.

Digital's outsourcing business contributed about $1 billion to the nearly $5.8 billion of services revenue generated in fiscal 1997 ended June 30, says Tim Leisman, VP and general manager of operating management. Outsourcing has been growing at about 30 % annually, he says, and represents one of Digital's fastest-growing services segments.

Under a five-year deal, scientific-instrument manufacturer Perkin Elmer has outsourced management of its data center to Digital, which includes support for an enterprise SAP R/3 implementation running on Hewlett-Packard Unix-based systems, says John Hill, VP of IT and CIO at Perkin Elmer, in Stamford, Conn. "We evaluated outsourcing network management, desktop management, and our data center, and decided the data-center outsourcing is most cost-effective," Hill says.

Before choosing Digital, the $1.3 billion company evaluated IBM and EDS. "But Digital was most interested in taking a modular approach," Hill says.

Dow Chemical has outsourced its help-desk operations to Digital under a three-year agreement. Digital will provide help-desk support for about 1,000 sales and marketing users of Windows NT and 95 applications, including Office and Exchange.

Meanwhile, GE Aircraft expanded its outsourcing agreement with Digital to include management and support of its Oracle applications. A previous contract includes systems management and operations support for midrange systems. Other details were not disclosed.

Extensions to existing outsourcing relationships, like the GE Aircraft and Dow Chemical pacts, represent a growing revenue stream for Digital, says Leisman. "Many customers start out by outsourcing one area of their IT and later decide to outsource other functions."

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