ChevronTexaco Prefers IBM For Services

ChevronTexaco Corp. has tapped IBM to join BearingPoint Inc. as one of its preferred providers of business-consulting services following a nine-month evaluation period. The two-year agreement, unveiled today, means that the oil and gas conglomerate must first turn to either IBM's Business Consulting Services or BearingPoint for consulting projects that focus on IT-driven processes such as supply-chain management, procurement, and outsourcing.

ChevronTexaco will choose which firm to work with on a project-by-project basis, and in some cases IBM and BearingPoint will work jointly. The value of the deal was not revealed.

IBM Business Consulting--formerly PricewaterhouseCoopers Consulting prior to its acquisition by IBM--had already been engaged in a number of major IT projects with ChevronTexaco. But, says John W. Joyce, leader of IBM Business Consulting's petroleum practice in the Americas, "this is going to greatly expand the scope of work we do with them." (Joyce is not related to IBM CFO John R. Joyce).

IBM is currently working on merging separate SAP systems that were in use when Chevron and Texaco merged in 2001. The successful integration of IT systems is key to the billions in savings that ChevronTexaco hopes to achieve by operating as a single entity.

This morning, company chairman and CEO David O'Reilly told stockholders that ChevronTexaco is successfully completing the merger and "operating today as one company with common systems, policies, and practices." He said the company is on pace to achieve $2.2 billion in savings derived from merging back-office operations and IT systems, well beyond the $1.2 billion originally estimated.

ChevronTexaco shareholders this morning also selected PricewaterhouseCoopers LLP as the company's independent auditor, an indication that the PwC spin-off is paying dividends for both IBM and PwC's auditing business. In the post-Enron era, businesses are wary of purchasing consulting and auditing services from a single vendor because of concerns about conflicts of interest.

Joyce says other "discussion points" between the two companies include the possibility of IBM providing the oil producer with hosted software services, offshore outsourcing facilities, and business-process outsourcing services.