More than a year into an $1.8 billion agreement with AT&T Solutions and International Business Machines Global Services, Bank One Corp. is gaining recognition as an especially effective manager of outsourcing.
The Chicago banking company says its six-year outsourcing contract has lowered costs and employee attrition. It has also spawned a "farm system" for bank technologists at Ohio State University in Columbus, the old Banc One Corp.'s headquarters city.
Meanwhile the company has won accolades for its tough negotiation on service levels, its oversight of the outsourcing relationship by a high-level governance board, and its attention to the community.
In an industry that has curtailed big outsourcing agreements or avoided them altogether, observers are touting Bank One's Technology One Alliance as a standout example of how they should be done.
The alliance is "a marvelous example of outsourcing," said Peter Bendor-Samuel, chief executive officer of Outsourcing Center, a consulting firm that publishes an Internet newsletter about outsourcing. The most recent issue named the Bank One agreement one of six "outstanding outsourcing relationships."
"We had unique business challenges that led to a strategy that we believed could be best implemented with really strong outsourcing partners," said Marvin Adams, chief technology officer of Bank One, referring to the multitude of systems Bank One has acquired over the years through numerous mergers.
The Bank One contract, signed in the fall of 1998, gives $1.4 billion over six years to the AT&T Corp. unit for voice and data network management. The remaining $420 million over seven years covers IBM's management of most Bank One data centers.
A variable cost model lets Bank One business units buy only the processing they need. Critical operations like the trading floor and call center, for example, pay a premium for real-time redundant service, while general offices pay less.
The two models aim to offer "internal technology services in a way that is consistent with the external marketplace," Mr. Adams said.
Through its relationship with AT&T, Bank One has managed to lower its attrition rate. Information technology experts are attracted to working for AT&T and IBM, Mr. Adams said. "They developed opportunities for IT people."
AT&T also helped Bank One establish the Columbus area as an information technology hub, by agreeing to work with local colleges to develop skilled IT professionals. AT&T awarded a $50,000 grant to Ohio State to develop a curriculum related to the technology alliance.
A board of directors headed by Mr. Adams includes two senior executives from IBM and AT&T. The board meets every 45 days and controls the infrastructure, delivery, and process management of the operation.
"We understood we had to give up ownership of the process and make the steps to allow AT&T to do their work," Mr. Adams said. "And AT&T lived up to its promise to do it better, faster, and cheaper."