Amtrak Signs Outsourcing Deal With IBM

Amtrak extended an IT services contract with IBM Global Services valued at $229 million. It expects to save about $85 million over a seven-year period.

This outsourcing deal replaces a 10-year, $111 million contract signed about eight years ago. In about a month, IBM and Amtrak will jointly develop an IT strategy that will better align Amtrak's business and IT priorities, says Dwayne Ingram, VP for travel and transportation with IBM Global Service. Outsourcing deals have to go beyond saving the company "X million dollars," Ingram says. "Companies today are saying, 'Help me with my business strategy, help me align IT with business, and do new innovative things with me.'"

As part of the outsourcing agreement, Amtrak and IBM will sell Amtrak's reservation system to other transportation companies that aren't already IBM customers. Amtrak's Arrow reservation system processes 3,300 transactions per minute via the Web, telephone, and ticket counter, making it one of the largest systems of its kind in the rail industry.

Unlike in the previous outsourcing contract, there will be no transfer of employees to IBM, Ingram says. According to the terms of the deal, IBM will provide business-recovery services and help-desk and desktop-support services for 7,500 workstations nationwide, and will manage Amtrak's voice and data networks, including the systems at its three reservation call centers in Philadelphia, Chicago, and Riverside, Calif. Amtrak is also turning over the operation and service of its computing infrastructure to IBM, which will manage it from a data center in Manassas, Va. IBM is able to reduce costs for customers by sharing data centers and help-desk operations, Ingram says. IBM plans to consolidate Amtrak's help desk into one IBM center.