General Motors awarded AT&T a $1 billion contract last week to manage its global data network, a key piece in the automaker's goal of manufacturing vehicles as cost-effectively as possible anywhere in the world.

Under the five-year deal, AT&T will help GM deploy and manage a standard set of cross-compatible voice, video, and data applications that will run atop GM's AT&T-built global data network and that will be available for use by GM employees regardless of location. "I want our employees to be able to wake up anywhere in the world and not need to know where they are," says GM CIO Ralph Szygenda.

In 2002, AT&T started work on a global VPN for GM based on multiprotocol label switching technology, which supports multiple data standards and is designed to allow more efficient network traffic routing. "We made an early bet on this technology and now it's paying off," says Ron Spears, executive VP for global business sales at AT&T. The network incorporates local and long distance services, global voice mail, conferencing, and high-speed Internet access.

The China Challenge
With that network now in place, the new contract calls for AT&T to assume a larger management role over GM's telecom and network assets. AT&T will manage not only the VPN but also the performance of more than 150 local and regional telecom providers that connect to it. Also, GM is counting on AT&T's telephony expertise to ease its expansion into countries where telecom standards differ from those in Europe and the United States. For example, AT&T has created network interconnections with China Telecom and China Netcom on GM's behalf. "China will be the largest challenge," says Spears.

Szygenda says he weighed a number of contractors, including IT outsourcers, before tapping AT&T. "The systems integrators aren't network experts. We wanted someone to manage the core network environment that knows the area," he says.

AT&T will need to work closely with the handful of IT contractors GM selected last year to build its next generation of business applications and to manage its computer hardware under a $15 billion, five-year outsourcing project. That group includes Capgemini, EDS, Hewlett-Packard, IBM, and India's Wipro Technologies.

"We've met with over 200 folks from those companies to determine how the piece parts will fit together," Spears says. GM's insistence that its technology vendors adhere to a broad set of IT standards will make it easier for AT&T. "There's a governance process at GM that ensures that we can function well together and that they get a seamless customer experience," he adds.

GM's larger goal is to give workers access to a standard set of business and manufacturing applications and collaboration tools regardless of where they work. That will give GM the ability to build cars in whatever location is best suited for the production of a particular model, Szygenda says. "It takes away the fragmentation," he says.

After drying up for the last several years, large outsourcing contracts with telecom carriers appear to be back in vogue. Earlier this month, financial services company Credit Suisse signed a five-year, $1.1 billion contract with BT Group and Swiss phone company Swisscom to hand off the operation of its global network. In a statement, Credit Suisse CIO Tom Sanzone said the deal will allow the bank to access state-of-the-art telecom technologies, such as wireless and mobile communications tools, faster and more cost-effectively than it could through its in-house organization.