IBM wins $140m outsourcing deal with Russell Group

Stan Beer
Tuesday, 24 January 2006 08:30

IT Industry - Deals

IBM has signed a seven year $140 million business transformation outsourcing (BTO) agreement with investment and superannuation specialist Russell Investment Group.

Under the terms of the agreement IBM will assume operation of Russell's Member Administration Service Centre in Australia and becomes a significant provider of superannuation member administration in Australia.

The agreement will involve the transition of the service centre operations and a majority of the service centre's 199 staff to a wholly owned subsidiary of IBM Australia. Russell will maintain all client relationship functions. Initial work will include the implementation of new customer relationship management processes and technologies.

IBM will also assume control of the Member Administration Service Centre's Information Technology (IT) operations including IT staff, servers and desktop operations.

In the short term IBM will implement a range of services to streamline IT operations including remote server monitoring and administration and full-time help desk. Over the course of the next year IBM will migrate Russell's servers to an 'On Demand' offering in its Sydney data centre and migrate hosting of Russell's Member Administration Portal to IBM's E-business Hosting offering. IBM will also leverage its global application management services capabilities to manage and transform the underlying software applications over the course of the agreement.

The contract involves a plan for IBM to develop a an integrated multi-channel service offering - across web, phone and on-site facilities.

Russell's Member Administration Service Centre administers $19 billion in member assets.

According to Alan Schoenheimer, managing director of Russell in Australasia, the agreement has been prompted by unprecedented changes in Australia's superannuation environment, such as the rise in superannuation outsourcing and member choice, which have driven demand for cost-effective, faster, more complex member administration services.

"We believe a seismic change in superannuation administration is about to occur as choice takes hold and more people begin to 'own' their growing super balances," Mr Schoenheimer said. "Super administration requires scale and constant technological innovation to stay at the leading edge of member services. This deal with IBM gives us the ability to scale as well as access world-leading technological innovation to meet the changing needs of our super fund clients and their members."

Continued strong growth in the Russell SuperSolution Mastertrust is also a major factor behind the deal, he said. Over the past two years, Russell SuperSolution has transitioned more than 30,000 members into its $2.5 billion master trust and is expected to grow to 300,000 members by 2010 as industry consolidation and corporate super outsourcing continues to pick up pace.

"With the rapid growth in our mastertrust and other funds, we want to ensure the processing part of our business is able to accommodate growth without compromising the quality of member services.  This deal is a great outcome for our employees, clients and fund members as it will provide the support for our growth potential," he said.

Glen Boreham, the newly appointed CEO and managing director of IBM Australia and New Zealand, said the deal was an important step toward IBM's goal to expand its consulting and technology presence in fast-growing financial services sectors around the globe.

"We are delighted to begin our strategic BTO relationship with Russell and welcome Russell employees into IBM," Mr Boreham said. "We are committed to becoming a leading provider of member administration services to Australian super funds, by leveraging our scale and expertise in Australia and around the world."