A Billion-Dollar Services Contract For HPA Billion-Dollar Services Contract For HP

Hewlett-Packard is preparing for head-to-head competition with IT-services leaders IBM and EDS. HP Tuesday announced two deals with Canadian Imperial Bank of Commerce. It will sell infrastructure services to CIBC as part of a seven-year contract valued at about $1.3 billion.

Calling the deal "a significant proof point for us," Ann Livermore, executive VP of HP Services, says it's the largest services deal in the company's history. CIBC has more than 8 million commercial and private customers, making it one of the largest financial institutions in North America.

"It's the next step to prove to the world and the market that we're a viable entity," says Joe Hogan, a VP of marketing at HP Services.

CIBC has its own reasons to support the deal. Says CIO Mike Woeller, "It will free up capital and management time from the noncore business."

HP will take over much of CIBC's IT infrastructure, providing technology and support for 5,000 desktops, 600 servers, a small group of midrange computers, and a couple of mainframes.

While there's no business-process outsourcing planned for now, that may change, Hogan says. "Hopefully, as we do our job correctly, they'll have the confidence" to expand the relationship.

In a related deal, HP will buy back CIBC's share of Intria-HP, an IT services partnership the companies began in 1998. As part of the contract, which the companies say was negotiated separately, HP will gain two fully redundant data sites and several office buildings in Toronto. More than 1,200 Intria employees will become HP employees, and the Intria brand will fall out of use. Livermore said no layoffs are planned as a result. Financial terms were not disclosed.

Both deals are scheduled to take effect Oct. 1.