IBM Global Services, Transportation Company Ink Data Center Deal

As part of the 10-year outsourcing agreement disclosed last week, 120 employees that work in BNSF's IT organization will become IBM Global Services employees on Sept. 1. Financial terms were not disclosed but the venture is geared toward helping both companies find new business opportunities, both in terms of expanding BNSF's transportation and cargo services and in expanding both business opportunities in the transportation and logistics industries.

Specifically, the outsourcing pact gives BNSF access to IBM's Center of Transportation Innovation in Boulder, Colo., where a team from BNSF, IBM Research and IBM's transportation consulting practice as well as from academia, will create new applications that can be used by BNSF or other companies in the transportation industry.

Among the technologies BNSF is looking to co-develop with IBM are Web-based logistics applications that will lessen its customers' reliance on third-party logistics providers, said Buddy Meyers, managing principal, transportation consulting, at IBM Global Services.

"The shipping community is looking to carriers to do more for them, they want tighter relationships," Meyers said.

But IBM sees the BNSF deal as more than a typical outsourcing arrangement. It is hoping to use the partnership to leverage new opportunities on other parts of the transportation industry such as ocean liner and motor freight companies.

"We are looking for a way to take new ideas and technologies and take them to the entire transportation market, not just railroads," Meyers said.

IBM will assume take over the management of BNSF's mainframe systems, 450 midrange and Unix servers and 16,000 desktop PCs, and operate the company's data centers in Topeka, Kansas, and Fort Worth, Texas, however BNSF will continue to own the data centers. As part of the outsourcing arrangement, IBM will also run the company's e-mail systems and its help-desk functions. IBM will also subsume BNSF's data communications network and Web development functions, Meyers said.

However, BNSF will continue to oversee its internal application development and their telecommunications network, which among other thing is key to running the signals on its railroad lines.