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Tech Industry

IBM wins business services deals

Big Blue announces two service contracts with transportation companies, highlighting the computing giant's push into back-office business operations.

IBM on Monday will announce two contracts to provide procurement and accounting services to transportation companies, highlighting the computing giant's move into back-office business operations.

Both deals involve "on-demand" services, part of Big Blue's new strategy that lets companies buy computing power based on customers' use, similar to the way they now buy electricity.

In the first deal, IBM is teaming up with spending management company Ketera Technologies to provide on-demand procurement services for CNF, which offers services such as trucking and logistics.

IBM said the arrangement will allow CNF to move its purchasing processes to an Internet-based system, automating the buying cycle. CNF will use Ketera's "Spend Analysis" software to do such things as identify areas where it can better reduce and control costs. Big Blue will host the technology. CNF expects to be up and running on the Ketera system in 45 days, IBM said.

"On-demand procurement made the most sense to CNF," Mitch Plaat, CNF's director of contract services, said in a statement. "The flexible, affordable service allows us to achieve savings rapidly without the up-front investment and ongoing resource commitment associated with the implementation of enterprise software."

In the second deal, IBM is joining forces with accounting services company Intacct to provide shipping agency Transmarine Navigation with a Web-based, on-demand accounting system. IBM said the product will allow Transmarine to centralize its accounting functions on the Web and work with key financial data in "real time," improving controls and lowering costs. IBM will host and manage the service at Transmarine. Terms of the deals were not disclosed.

IBM said its decision to invest "hundreds of millions of dollars" in developing partnerships to offer on-demand services is paying off. Overall, the company has said it will invest $10 billion in building its on-demand capabilities, which will involve creating consulting groups, conducting more hardware and software research, and erecting computer centers around the world.

IBM and other companies see computing evolving into a utility, similar to electricity or water. Hewlett-Packard and Sun Microsystems also have utility-related initiatives.

The two transportation deals show that IBM is penetrating the market for managing business functions, as opposed to strictly handling hardware and software technology needs. Outsourcing tasks such as accounting, human resources and customer service--so-called business process outsourcing--is seen as a fertile field for information technology services companies. Other players in this arena include Electronic Data Systems, Accenture and Affiliated Computer Services.