Unilever Outsources Storage to HP in $675M Deal

Manufacturing giant Unilever has signed a massive $675 million, seven-year outsourcing contract with HP, underlining the growing popularity of storage outsourcing.

The deal, which covers Unilever's technology infrastructure in the Americas, Asia, Africa, and the Middle East, encompasses 4,500 server and storage devices from a range of vendors, as well as disaster recovery and messaging services.

Crucially, Unilever has opted to keep its European IT infrastructure, including servers and storage, out of the outsourcing equation.

"The business case was in favor of keeping it in-house -- its a very mature part of the organization," says Debbie Bunyan, Unilever's director of communications.

The exec would not reveal specific details of Unilever's storage infrastructure, but the firm's North American operation is said to rely heavily on IBM SAN switches and ESS hardware, as well as gear from HP and EMC.Under the terms of the deal, HP will manage Unilever's data centers and third-party contracts, as well as work closely with SAP, Microsoft, and BT in the area of application development. HP will also be responsible for overseeing Unilever's virtualization strategy, something that's becoming an increasingly complex issue for users.

Today's announcement, which involves the transfer of 250 employees from Unilever to HP, also supports the firm's "One Unilever" strategy. Announced in 2005, this initiative aims to consolidate the myriad companies within the pharmaceutical firm and establish standard business processes.

Unilever is just the latest big-name firm to outsource its storage operation, following in the footsteps of Nissan, which has teamed up with IBM, and GM which split a $15 billion contract across six main vendors in 2006.

Despite the growing momentum behind outsourcing, some users have already voiced their concern about relinquishing control of key systems, particularly email.

Analyst firm Forrester has nonetheless identified outsourcing as a key growth area in 2008, predicting demand to grow 9 percent this year, despite a slowdown in consulting and integration services.It is not just traditional server and storage vendors that are tapping into the outsourcing trend. Service provider Savvis, for example, is set to announce a multimillion-dollar contract to outsource the IT infrastructure of a market research company, Vovici, hot on the heels of similar deals with U.K. firms Elior and Allen & Overy.

Startups, such as Indian managed services firm NetMagic, are also looking to get in on this act. The hosting specialist clinched $20 million in Series B funding this week to bankroll its expansion into the U.S. market.

The vendor, which manages storage, server, and network devices for Indian firms from its four data centers in Mumbai and Bangalore, is now offering a similar outsourced service to U.S. firms.

The startup relies on the SNMP protocol, as well as proprietary management tools from the likes of Hitachi and EMC, to remotely manage storage gear, according to Sandip Gupta, the NetMagic president.

"The tools are used for provisioning, management, and capacity planning," he notes. "It's all done via the Internet -- we use VPN technology to establish a private connection to the customer's data center."Some U.S. companies are already looking at NetMagic's outsourced management service, one of which is a Web conferencing firm. "We do server admin, server provisioning, and application management for them, as well as managing their IBM storage," says Gupta.

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