American Express, IBM Sign $4B Deal - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


American Express, IBM Sign $4B Deal

American Express estimates that it will save 'hundreds of millions of dollars' in IT costs during the seven-year term of the contract.

American Express Co. bought into IBM Global Services' utility-based IT service delivery model in a big way Monday. The financial services firm will pay IBM Global Services about $4 billion over seven years to host its Web site, network servers, data storage, and help-desk support.

The American Express contract is IBM Global Services' largest for utility-based service delivery, says Paul Sweeny, IBM Global Services' general manager of financial services. Sweeny adds that the recession is pushing acceptance of the utility-based model, in which payments are based on actual usage of IT services rather than a flat fee. American Express estimates that it will save "hundreds of millions of dollars" in IT during over the life of the contract, he says.

As part of the agreement, American Express will also move about 2,000 employees worldwide to IBM Global Services. The employees will continue to work out of American Express' data centers in Phoenix and Minneapolis, as well as locations in England and Australia. In March, IBM will begin taking over American Express' transaction-processing operations.

The concept of on-demand access to IT resources isn't new, but it's been slow to attract large companies such as American Express, says Andrew Schroepfer, president of Tier 1 Research. Larger companies have been compelled by cost-cutting measures in the past year to procure IT services through a utility-based model because it relieves them of the responsibility of upgrading equipment and managing the IT environment. Says Schroepfer, "This is a more efficient technological way to buy processing power and a more efficient way to pay for it."

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
The State of Cloud Computing - Fall 2020
The State of Cloud Computing - Fall 2020
Download this report to compare how cloud usage and spending patterns have changed in 2020, and how respondents think they'll evolve over the next two years.
InformationWeek Is Getting an Upgrade!

Find out more about our plans to improve the look, functionality, and performance of the InformationWeek site in the coming months.

New Storage Trends Promise to Help Enterprises Handle a Data Avalanche
John Edwards, Technology Journalist & Author,  4/1/2021
11 Things IT Professionals Wish They Knew Earlier in Their Careers
Lisa Morgan, Freelance Writer,  4/6/2021
How to Submit a Column to InformationWeek
InformationWeek Staff 4/9/2021
Register for InformationWeek Newsletters
Current Issue
Successful Strategies for Digital Transformation
Download this report to learn about the latest technologies and best practices or ensuring a successful transition from outdated business transformation tactics.
White Papers
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll