Sprint Goes the Distance With Big Blue

BTO refers to IBM using its army of business consultants to help a client reengineer its business, while using IT to enable those changes. Having inked several such contracts as of late--customers include BP, Lincoln Financial Group, Procter and Gamble and Raytheon--Big Blue describes the Sprint deal as its biggest yet.

Both parties stand to gain from each other's expertise in a way that underscores the changing nature of IT and business partnerships.

"This is a very broad partnership," says Rebecca Scholl, a senior analyst at Gartner who specializes in business-process reengineering. "The metrics around what they are trying to accomplish are quite interesting and innovative."

Specifically, the Sprint partnership consists of four key components. The first and most significant aspect of the deal centers around Sprint's global customer-care organization. IBM Business Consulting is taking over Sprint's eight customer-service centers and 21 vendor-managed ones, while unifying a slew of disparate CRM systems. Sprint is also looking for IBM to increase utilization of self-service tools, such as its Web site, which will reduce costs. And the company, no doubt, is hoping IBM can help bolster its dismal customer-service track record.

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The second part of the deal focuses on application development and maintenance of systems that are used in customer-support functions. IBM Global Services will take on more application-development and maintenance functions, expanding on a deal signed last September. Key here is leveraging IBM's Capability Maturity Model (CMM) levels 4 and 5 engineering capabilities, improving quality of development and time to market.

"IBM will introduce the more flexible service tools to us, allowing greater efficiencies," said Len Lauer, Sprint's president and COO, speaking at the company's recent securities-analyst conference in New York.

The next part of the pact has Sprint calling on IBM to bring it in on more of its IT-outsourcing deals. This approach will allow Sprint to reach enterprise customers who rely on systems integrators like IBM--which often uses AT&T as a subcontractor--for the telecommunications decision, Lauer said. "This combination of Sprint's services and IBM's integration and IT expertise is expected to result in significant new revenue opportunities for both companies," he said.

The final nugget of this deal centers around Sprint's agreement to invest $100 million in IBM's Service Provider Delivery Environment, a rapid application-development solution designed to port desktops to mobile devices. Sprint views that as a key enabler of going to market with wireless-enabled applications.

Analysts observe that IBM is clearly pinning its future on marrying business to IT--with an emphasis on business transformation. "IBM is betting the farm that IT is going to become a utility like light or power that you turn off and on, and it will make the most sense for most customers to outsource--that's the long-term end game," says Nina Lytton, president of Open Systems Advisors.

IBM, however, is in danger of spreading itself too thin. "IBM is reaching very broadly," Lytton says, "and the risk when you reach broadly is you may lose your balance and topple over."

The good news? If you're a frustrated Sprint customer but are reluctant to change carriers, hang in there--chances are good that support and service will improve later this year.