Banks Become Upgrade Hot Spot

Banks are emerging as an upgrade hot spot for systems integrators and outsourcing vendors.

A survey commissioned by Accenture Inc. and SAP AG indicates that banks around the globe are planning to upgrade aging core banking systems. Three quarters of the bank executives polled cited lack of flexibility as the biggest problem affecting banking systems, with half the respondents describing poor integration and high maintenance costs as key troubles.

As a consequence, banks plan to replace core banking systems. Twenty percent of North American respondents said they expect to replace banking systems within the next five years. That figure is 30 percent in Europe and 35 percent in Asia Pacific. About 1,500 bankers participated in the survey.

While the survey points to future projects, large-scale bank deals have already come to the forefront. Earlier this month, Dutch banking giant ABN AMRO awarded $2.2 billion in outsourcing contracts to five vendors. Those companies include Accenture and IBM and three Indian companies: Infosys Technologies, Patni Computer Systems Ltd., and Tata Consultancy Services.

Infosys called the deal "the single largest multi million Euro contract" the company has ever won. Patni said its slice of the project represents the extension of an existing relationship. Tata, meanwhile, called its share the "largest deal won by an Indian IT services company."

The Indian company's success on ABN AMRO lends credence to the assertion of one consulting firm that outsourcers based in India will increasingly give U.S. and European firms a run for their money

Katzenbach Partners LLC believes established outsourcing players in the U.S. and Europe are struggling to control rising infrastructure costs.

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The companies will bid for applications and development projects supporting ABN AMRO's operations in Europe, North America, and Brazil. ABN AMRO terms this program the Group Shared Services Information Technology initiative.

The Accenture/SAP survey suggested that vendors hoping to win favor with banks will have to address the divergent needs of both business and IT managers.

The survey also found that 40 percent of the IT-oriented respondents seek a system that reduces expenses. But 39 percent of the business executives polled cited product innovation as primary value they hoped to obtain from a core banking system.

The Accenture/SAP study defines core banking systems as those that let banks manage basic financial products and services, including deposit accounts, loans, mortgages, and credit cards.

Unisys Wins Columbian Outsourcing Deal

Unisys Corp. and Synapsis have captured a $27 million outsourcing contract from ECOPETROL, Colombia's state-owned oil company.

The 4-year deal is worth $14 million to Unisys and $13 million to Synapsis.

Unisys will maintain the oil concern's 200 servers and manage its network, security and service-desk operations. Synapsis will manage the company's 200-plus applications and provide data center management, telephony and videoconferencing services.

Synapsis is a business unit of Endesa Group, a utility that generates power in Spain, Brazil, Argentina, Chile, Colombia and Peru.

The Columbian contract represents something of a departure for Unisys in terms of market coverage. A spokesman for Unisys said the energy industry "isn't one of Unisys key global focal market sectors." He said the contract award came about because "our capabilities fit the client's requirements for IT infrastructure outsourcing."

Next page: Manhattan Associates inks deal with CSC.

Manhattan, CSC Ink Alliance

Manhattan Associates and Computer Sciences Corp. are combining forces to provide logistics solutions to manufacturers, consumer goods providers, and life sciences firms. The alliance was disclosed on Tuesday.

CSC will offer consulting and systems integration services to the alliance, while Manhattan Associates will provide its Integrated Logistics Solutions software. The latter company also will contribute implementation services, customer support and maintenance.

Systems Analysts Feel Offshore Impact

Offshoring has put the squeeze on certain job categories.

That's the view of speakers discussing labor trends at a recent WashTech/CWA teleconference. WashTech/CWA, a Seattle-based alliance of tech workers, reports that tech workers have lost confidence in the market's demand for their services going forward.

John Ledingham, an independent IT contractor in San Diego, said jobs for systems analysts and senior systems analysts are paying less and declining in number. He said his local paper once posted five columns worth of such jobs in the employment section. That has dwindled to two columns in which some of the listings are repeated.

Ledingham believes systems analyst jobs are vulnerable because they are easier to send out of the country.

Marcus Courtney, president of WashTech/CWA, said Ledingham's observation underscores "a difference between what corporations are saying and what [people] on the ground experience in labor markets."

In contrast, IT management jobs seem to be on the rebound.

Ledingham said management jobs involving the coordination of offshore work have seen a steady increase in compensation.

ACS Looks Abroad

Affiliated Computer Services Inc. is expanding its global reach through both organic growth and acquisition.

On the acquisition side, the company last month announced an agreement to purchase the Transport Revenue division of Ascom AG, a Swiss communications company. That $100 million transaction is expected to close late this year. Ascom's Transport Revenue division extends ACS' business process outsourcing capabilities in the transit and parking payment markets.

Warren Edwards, ACS' chief financial officer, said the company has had less luck finding international acquisition targets in the information technology outsourcing arena. Edwards, speaking at this week's Citigroup Global Technology Conference, said ACS will grow that aspect of its overseas business organically. The company has opened facilities in India, Ireland, and Poland.

Overall, about 80 percent of ACS' business stems from business process outsourcing, while 20 percent comes from IT outsourcing deals.