IBM wins Texas-sized data center consolidation contract

IBM announced Wednesday that it won a seven-year, $863 million contract to consolidate the Texas state government’s 31 data centers into two facilities in San Angelo and Austin.

IBM says the consolidation project will take two years, and after taking costs into account the deal is projected to save Texas $25 million in 2008 and 2009 and $159 million over the base contract period, IBM and the Texas Department of Information Resources said.

IBM will run the contract and provide mainframe and server consolidation and IT operations. Contract partners Unisys will provide data center operations and facilities management. Xerox will provide print management and operations, and Pitney Bowes will provide mail services. AT&T and Dell are also part of the contract, offering hardware, software as well as change and risk management services.

IBM said it would meld the data centers into an existing 13,000-square-foot data center in San Angelo and a new 36,000-square-foot data center it is creating in Austin.

The contract isn’t without its detractors however. Published reports say the state government awarded a five-year, $899 million contract to a group of companies led by Accenture to privatize call centers. The program has been plagued with problems.

The Texas State Employees Union had urged lawmakers to delay the contract’s signing, saying it is “overly hasty and exposes Texas taxpayers to the danger of yet another costly high-technology boondoggle.” The union, which includes over 11,000 workers in 54 agencies, has asked the state to hold off on awarding the data center contract, the Austin American-Statesman reported.

There could also be some complaints from other bidders on the contract as IBM’s award is basically an expansion of an existing contract the government has with Northrop Grumman. That contract expires in August 2007.