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6/10/2008
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Procter & Gamble Signs $650 Million Outsourcing Deal With BT

BT will run P&G's VoIP, Internet services, remote access, audio and videoconferencing and some security services like firewall and anti-virus.

The keyword at Procter & Gamble is collaboration. The company runs a Web portal where inventors can submit product ideas to the company and has a broad collaboration plan in place that includes blogs, wikis, presence-enabled unified communications and telepresence. But those plans won't realize their potential without a top notch network, as P&G's newly announced $650 million outsourcing deal with BT Group suggests.

The agreement announced Tuesday gives BT control over a wide swath of networking capabilities, including LAN and WAN network infrastructure and management at more than 1,100 locations in more than 80 countries. BT will run P&G's VoIP, Internet services, remote access, audio and videoconferencing and some security services like firewall and anti-virus.

Many of those services were already provided by Hewlett-Packard, but this keeps the heavy lifting out of P&G's corner for P&G's ventures into IP communications. "Just like we buy power and just care that the light goes on, we just want to plug something into a jack in the wall and know that the power is there to give us dial tones or computer connections when and where we need them," said Alistair Wilson, P&G's associate director of global business services responsible for networks and telecom.

Procter & Gamble is no stranger to big outsourcing deals. In 2003, the company signed a 10-year, $3 billion outsourcing deal with HP, which will continue to manage much of P&G's infrastructure, and a $400 million multi-year deal for human resources services from IBM. Though the HP deal handed over control of P&G's existing networking infrastructure to HP, with the new deal in place, BT will migrate P&G to a worldwide high-performance global MPLS network that will be able to handle P&G's increasing IP demands.

"The keyword here is unification," Wilson said. "When we outsourced to HP, it was here is the LAN, here is the WAN, here are the cell phones. With a converged architecture, these start to become just points on the same network. The future is here today, it's just unevenly distributed. "

After all, P&G has the most Cisco telepresence rooms outside Cisco itself (42, in case you were wondering) and aims to build more. There are unified communications pilots in place in Europe and a few offices in the United States, where P&G hopes to be able to do things like have employees walk into their office talking on their cell phone and easily transfer the call to the video phone at their desk without dropping it. BT, Wilson said, will bring the scale and expertise needed to take initiatives like these global and expand them to new technologies.

The deal ranks among BT's top ten largest as the company continues to position itself as a global bigwig in telecom and networking services with clients like Credit Suisse, Bristol Myers Squibb and Reuters. "If I can act globally, then I can respond globally," said BT Americas president Michael Boustridge. "If you look at that and what they're saying about speed, quickness, that's what companies are looking for and that's what BT's trying to say what our core business is.

According to Boustridge, global deals like the one signed by P&G are increasingly taking on a number of relatively common features, including managed WAN and LAN, managed voice and mobility, remote access and security.

Though the deal with P&G is global, it's part of a concerted effort by the British telecommunications company to increase its standing in the United States. Within the past few months, BT has signed more than $1 billion in outsourcing deals in the United States alone, counting the deal with P&G, and reported a 20% increase in North American revenues last quarter.

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