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HP's Multi-Billion Iaas Contract with Deutsche Bank: More Evidence that Big Infrastructure Outsourcing is Back

HP recently announced a major (multi-billon) 10-year IT infrastructure management services contract with Deutsche Bank’s wholesale banking division (which accounts for around 50% of the DB Group revenues).

HP Enterprise Services (HP ES) will deploy HP Helion, providing data center services on-demand including storage, platform and hosting – activities formerly essentially done in-house. Deutsche Bank retains control of the IT architecture, application development and IT security.

The decision to outsource was driven by the client’s need to modernize its IT infrastructure and re-engineer its underlying technology platform globally to be able to support the introduction of digital services. A small number of the client’s IT staff will transfer to HP ES as part of the outsource.

HP ES’ Howard Hughes and Martin Southgate took the time to tell us a little more about this big win, also about other client news in the IaaS space.

HP’s previous relationship with the corporate banking division of DB was mainly around hardware and middleware. DB’s relationship was with HP,OHP not with HP ES.

The deal is global in scope, covering 10 countries including Germany, U.K., the U.S. and five major centers in APAC. The solution is essentially HP Helion for Managed Cloud, in due course featuring OpenStack. The fundamental cloud solution and the overall transformation methodology and approach are all HP standard, with some customization at the local level to meet local regulatory requirements around how DB uses the service.

HP ES highlights the sophistication of its approach to migrating to the new platform, in taking workloads from the current estate, which is essentially Wintel and Linux, plus some AIX and SPARC-based platforms, and moving some of the work into HP datacenters. One feature of this will be in how it will deal with the client’s current virtualized environment (about 20% of its estate is currently virtualized). HP will be “adopting” those environments, i.e. wrapping the existing set up with its automate tools to move them towards fully autonomous self-service.  So wrapping and adapting the existing environment before rolling out HP Helion will be a feature of the migration.  There will be annual upgrades to the solution during the 10- year contract with the first release going out some time this year, and the expectation that OpenStack will feature by 2016 or 2017.

HP ES spent “a significant amount of time” with the client doing upfront data discovery, getting to know the client’s applications estate, how different applications fit together, the various infrastructure components etc., to be able to automate more of the work around the migration onto the new cloud capability. The team then started to work through standard patterns for groups and applications.

The ultimate transformation to a fully cloud-based infrastructure (migrating workloads, building the cloud, rationalizing data centers, simplifying things) is expected to take around three to four years. When the procurement started around 18 months ago, the client’s focus was on software and product capability but over a period it became evident that outsourcing incorporating consumption-based pricing was needed if it were to generate both the savings and the speed of transformation it was looking for.

In the HP Q1 FY15 earnings call, CEO Meg Whitman referred to the “One HP” approach, led by ES and with EG enterprise group, software business heavily involved and to the pursuit having been “hard fought” (the final contender against HP was IBM, who is a strategic partner o DB’s retail division),

With a “heavy lifting” deal like this that involves multi-country data center consolidation and migrating very large mission-critical workloads, using automation for a lot of the apps discovery, onto hybrid clouds at a global scale, with enterprise class services across the cloud-enabled data centers, and supported by multi-lingual, multi-region service desks - - - there are very few vendors globally who can really take on this type and scale of transformational outsource. Being a safe pair of hands is absolutely critical in these deals, as is having the necessary toolset to facilitate the transformation in architecture.

IBM and HP have been investing heavily on building global cloud data center capabilities (and, indeed continue to do so) and are now starting to reap the benefits.

IBM recently announced large IaaS deals with the likes of Anthem ($500m), WPP ($1.2bn) and ABN MRO (multi-billion).

And HP is signing several other deals in the hundreds of millions, some of which will be announced shortly. It claims to have a very strong pipeline of large IT infrastructure management opportunities involving a migration to a hybrid cloud environment –- and also to be able to compete much better than it used to for smaller-scale end user outsourcing opportunities.

So where recent years have been marked by the rise of the competition from IOSPs (notably HCL, Wipro, TCS, and Infosys) in infrastructure management recompetes, we are now seeing a return of Big Infrastructure Outsourcing with large multi-nationals migrating to the cloud, often in order to be able to drive a digital agenda across their core production applications. And here the Big Boys with the requisite global cloud data center estate, the cloud automation tools, and the network management capability will once again be the victors.

This is perhaps why, with less than stellar quarterly results recently, IBM Global Services and HP Enterprise Services can be fairly bullish about the future. While cloud may have started in relatively safe areas such as in support of the end-user workplace and IT development environments, multinationals in sectors such as banking and telecoms are now increasingly looking at moving to hybrid cloud environments to support their digital agendas across their major business portfolios.

(Coincidentally, both HP ES and IBM GS have been focusing on realigning their BPO portfolios recently, but both appear to continue to struggle with their enterprise applications outsourcing businesses…)

(see also here)

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