IBM: In a State

IBM is quietly shoring up state government deals that could bode well for its future -- and that of its storage partners.

This week, the Indiana state government announced that Gov. Mitch Daniels (R) has accepted a recommendation from a group of state agencies to contract an IBM-led team of consultants and integrators for a series of projects totaling $1.16 billion over 10 years.

The plan, which is set to be finalized after a December 8 public review and various government approvals, would require IBM and its partners to create a system that determines the eligibility of candidates for welfare under the Indiana Family and Social Services Administration (FSSA). Additionally, IBM will have to donate an IBM BladeCenter Cluster and associated services worth $6 million to $7 million to Purdue and Indiana Universities.

If and when it's finalized, the deal could include a ton of business on the storage side. "I'm sure there will be some storage. Whether it's Shark, LSI, or NetApp, I have no idea. It could even be EMC or HDS since these are IGS [IBM Global Services] wins," says one industry analyst, who asked not to be named.

None of the big storage and data management vendors associated with IBM, including LSI and NetApp, would comment on the deal.There seems to be room for some smaller fry too, judging by the alliances and/or products formerly purchased by IBM's partners in the deal. Integrator ACS, for example, has endorsed products from Mimosa and CA's XOsoft in the past. (See XOsoft Upgrades WANSync and Outsourcer Selects Mimosa.) Accounting system consultancy Crowe Chizek has an alliance with Avamar. Indiana-headquartered Haverstick Consulting has relationships with NetForensics, Packeteer, RSA, and Symantec.

If approved, IBM's work in Indiana could start in August 2007.

Table 1: IBM Partners in Indiana Government Contract

IBM is also at work in Texas, where the vendor, along with partners Xerox and Pitney Bowes, has won a seven-year, $863-million contract to revamp the Texas Department of Information Resources data centers. As in Indiana, IBM will be responsible for hiring 330 employees to work for the state in the process.

The Texas deal was signed on November 22 but won't take official effect until March 2007.Despite the good news for IBM, the supplier, which realizes more than 50 percent of its revenue in services that generate roughly $10 billion per quarter, hasn't been signing new contracts as rapidly as it hoped. Last quarter, for instance, services signings were down roughly 5 percent year on year.

IBM also has had its share of woes in state government business. Last month, the government of North Carolina reported its own project to revamp school system IT after ditching IBM in a well-publicized fiasco for Big Blue. (See IT Project Reports on Life After IBM.)

Mary Jander, Site Editor, Byte and Switch