BP outsources SAP to IBM in five year deal

IBM has inked a five-year outsourcing deal with British Petroleum to manage the oil giant's enterprise applications and integrated service desk operations.

BP awarded Big Blue the largest among many contracts it is currently doling out to service providers, worth £1.5 billion over five years. IBM's deal displaces a previous arrangement BP had with Accenture to outsource its entire SAP environment.

Under the deal, IBM will provide application development and application maintenance (ADAM) services for BP, with the directive to simplify processes, improve service quality and enable strategic partnership for the oil company.

"We see a significant opportunity to simplify and standardize BP's work processes while leveraging IBM's world class expertise in this area and their strong knowledge of the Oil and Gas industry," said Dana Deasy, BP Group CIO, in a statement. "This contract will enable BP to reduce complexity, whilst lowering our overall cost base."

IBM Global Business Services will also manage BP's SAP applications, including enhancements at client sites and from IBM's network of delivery centers, according to a press release. IBM representatives could not disclose the financial details of the contract.

IBM points to its application management services (AMS) expertise and its global delivery network as strengths against competitors such as HP EDS in the outsourcing market, and IDC recently rated IBM as the leader in application outsourcing.

BP has rationalised its outsourcing contracts from 40 service providers to five in a total contract value of £1.5 billion (US$2.5 billion) over five years, £500 million lower than BP had budgeted for the contract. Along with IBM, three Indian outsourcers - Wipro, Infosys Technologies, and Tata Consultancy Services - have been selected by BP. IBM has bagged the largest among the contracts.

John Ribeiro contributed to this article.