IBM secures $1bn contract with AXA

International insurance and financial services company AXA has awarded a $1bn (£632m) contract to IBM to replace its IT systems with an on-demand computing infrastructure.

AXA believes the six-year deal will allow it to make cost savings of around 525 euros (£362m).

'AXA has been on a big cost cutting exercise since September 2001, following the World Trade Center attacks,' spokeswoman Carla Rodrigo told Computing. 'This contract is a way of rationalising our IT infrastructure, and to help us cut costs across the company.'

The contract will cover IT systems across global operations, which covers 50 countries and 140,000 staff.

Until now AXA has had traditional, fixed-cost IT systems. The new infrastructure will provide a flexible environment, where the company will pay only for the computing power it uses.

According to Rodrigo, this new approach will not only allow for cost savings and greater flexibility to be achieved, but also for the company to have access to much more up-to-date systems.

'This is also an opportunity for us to have access to modernised machines,' Rodrigo said. 'IBM is doing this for us.'

IBM launched its first pay-as-you-go computing power service last year (Computing, 4 July 2002), and has said it has high hopes for utility computing.

The on demand model has been increasingly attracting the attentions of large companies. In recent months American Express, Deutsche Bank and JP Morgan Chase have all signed on demand agreements with IBM.

Under the terms of this deal, which contains a clause that could extend it by four years to 10 years, IBM will consolidate AXA's mainframe, server and storage infrastructures. AXA will then pay for the capacity it uses on a per unit basis.

The companies have worked together before, but never on a scale such as us.

Rodrigo says the size of the infrastructure overhaul made it impossible for AXA's technical division, AXA Tech, which deals with the company's IT, to take on the work itself.

'Our business is to sell insurance and financial services,' Rodrigo said. 'It's not to install IT systems, and we will benefit from IBM's expertise in this area.'