IBM agrees 'risk and reward' contract

IBM is working on a pioneering £35m contract with Barclays Bank in which it has agreed to share the risks of a series of high-profile IT ventures.

The deal is part of a two-year £700m investment by the High Street bank to rebuild its IT infrastructure using internet-based technologies.

IBM software will be used in more than 20 programmes, five of which have been identified as vital to Barclays' business, according to chief technology officer Kevin Lloyd.

The five programmes will be monitored by a joint IBM and Barclays team composed of senior executives from both organisations, with direct access to IBM's top technicians. If the projects do not succeed, Big Blue will share the costs.

"We are stretching our business and our customer proposition, and to do that we are pushing the envelope on the latest IBM product developments. IBM has entered into a risk and reward agreement, so if those projects do not succeed, that comes into play," Lloyd told vnunet.com's sister publication Computing.

The first of the five top projects to go live was a bespoke web-based banking service for Barclays' medium and large business customers, which was launched in June.

Another initiative will see Barclays' corporate sales teams taken out of branches to become mobile workers, spending more time visiting customers. A central intranet built with Lotus Domino will provide personalised information to sales reps on the road.

The other high-profile projects are a multi-channel banking service in Spain and France, a data warehouse project and web-based applications at credit card provider Barclaycard.

Barclays has told IBM what products it expects to buy, but is allowed to change its mind. The bank also has deals with BT, Cisco, Oracle and Microsoft to help modernise its IT systems.