Electrolux charges forward with IBM

The appliance maker expands its relationship with Big Blue through a seven-year outsourcing deal to manage desktop use in Electrolux's European offices.

Ed Frauenheim Former Staff Writer, News
Ed Frauenheim covers employment trends, specializing in outsourcing, training and pay issues.
Ed Frauenheim
2 min read
Appliance giant Electrolux is tapping Big Blue to tend to its desktop computers, the companies plan to announce Monday.

In a seven-year outsourcing deal that expands an existing relationship between the companies and continues IBM's "on-demand" computing push, IBM said it will manage the desktop environment in Electrolux's European offices. It will provide computer users there with Lotus Notes messaging and collaboration software as well as support, administration and help desk services.

The contract is worth $212 million to $259 million, estimates Stratos Sarissamlis, a Meta Group analyst familiar with the arrangement. The deal is not as big as some of IBM's other information technology contracts. But Sarissamlis said it is significant that Big Blue is offering on-demand pricing for a comprehensive set of desktop computer and local area network (LAN) services, rather than just for pieces of the desktop environment.

He also suggested the deal arose in part from a shift in Electrolux's internal IT department, which moved from focusing on technology to paying more attention to the service it gives to other departments. Electrolux "was in the right mindset to understand the on-demand service provision and pricing," Sarissamlis said.

Sweden-based Electrolux will pay IBM per user as business grows and shrinks, Big Blue said. The contract anticipates a likely range of between 13,000 and 19,000 desktops.

IBM touted the deal as the latest in its on-demand initiative, a broad effort that has an eventual goal of computing resources being offered and paid for as a utility, like electricity. IBM said it has signed IT pacts that include that kind of variable cost structure with companies such as American Express, Dow Chemical and JP Morgan Chase.

IBM currently is working with Electrolux to help the company accelerate its product development.

As part of the new agreement, more than one hundred Electrolux IT employees are to transfer to IBM. In addition, the Armonk, N.Y.-based company will take on hardware assets from Electrolux. Big Blue anticipates the new service will start Aug. 1.

IT outsourcing, which involves companies farming out operations such as data center management and applications development, is seen as a fertile field in a bleak IT spending environment. Market research firm Forrester Research has said IT outsourcing is the fastest-growing segment of the technology services market--expanding at a 14 percent annual rate through 2007.