IBM to Handle CF’s Data Services

Consolidated Freightways is the first trucking company to outsource a large segment of its information technology operations to IBM Global Services, a unit of International Business Machines Corp.

IBM Global said it will take over most of CF’s data services business under a five-year, $110 million “strategic technology partnership” that runs through 2003.

It will handle CF’s data center management; network, voice and data management; desktop management; help desk support services; and business recovery services.

The services being transferred make up about 50% of CF’s IT operations, according to Matt Saikkonen, chief information officer for the Menlo Park, Calif.-based carrier. CF will retain its IT application development and strategic planning functions, he said in a telephone interview last week.

CNF Transportation, CF’s former parent, has managed the data services operations under a service contract since it divested the carrier at the end of 1996, Mr. Saikkonen said. The CNF contract, which expires in November 1999, will overlap with the IBM Global agreement during a transition period, he said.

CF, the nation’s third-largest less-than-truckload carrier, is making the change from the perspective of access to the best and latest technology, not for financial reasons, Mr. Saikkonen said. He declined to say what the comparative costs and savings would be.

Spokesmen for both companies noted that IBM has provided services and equipment to CF for 35 years.

IBM Global, based in Somers, N.Y., says it is IBM’s fastest growing business segment. The unit had 1997 revenue of about $26 billion and has signed $24 billion in new service contracts through the third quarter of this year.

While CF is its first pure-play trucking client, IBM Global has signed up a number of other transportation companies, including Miami-based Ryder System. The Ryder deal, worth $1.4 billion over 10 years, also involved a partnership with Andersen Consulting and was tailored to logistics technology (TT, 3-17-98, p. 51).