Laurentian Bank deepened its ties to IBM Canada on Tuesday, announcing a six-year, $30-million agreement whereby it will adopt a utility computing model for major parts of its IT infrastructure.

The

agreement extends an earlier four-year deal for IT operations management Big Blue and Laurentian signed several years ago.  Laurentian jumped into outsourcing in 2001, when it signed a 10-year agreement with Montreal-based CGI worth approximately $300 million to handle an array of services. These included project development, application maintenance and evolution, operations support, network management, technology deployment, technical support and the bank’s automated banking machine network. 

Lucie Forcier, assistant vice-president of Laurentian’s technologies operations management, said The IBM deal focuses specifically on mainframe systems supporting wealth management, mutual funds and the bank’s commercial business lines. 

“The computer that we have would have required upgrades,” she said. “It was not a new one. It was better for Laurentian Bank to use a new one, which will have more capacity than the old one.”

Laurentian’s infrastructure will include equipment that may not be turned on until it needs it to handle an increase in computing load – for example, during a peak business period such as the RRSP season, Forcier said. This model, which many exerts call utility computing, is called “on-demand” by IBM and has become a cornerstone of its Global Services strategy.

“It could happen at any time,” she said. “We have always increased capacity every year, so definitely we will have to use on-demand new resources.”

Denis Chalifour, director of IBM Global Services, Quebec, said Laurentian wanted its growth to be as granular as possible, which meant its IT infrastructure needs to scale quickly if necessary.

“You’ll have a number of CPUs active – let’s say 16. You can load the box with a greater number of CPUs as they wish, and just turn it on,” he said, adding that IBM does a lot of capacity planning with customers like Laurentian. “If you implement new applications before peak periods and have a track record of consumption, you can more readily respond to unforeseen needs.”

IBM has been touting virtualization as a way of improving utilization and easing management of mainframe systems, but Forcier said Laurentian is not prepared to go that route. 

“One year ago we examined that, and it was not appropriate at that period, but in the future we could consider that,” she said, adding it may make more sense if and when the bank needs to consolidate some of its servers. 

While several Canadian banks have struggled to provide consistent levels of service amid software glitches and blackouts, Chalifour said Laurentian’s use of utility computing would leave it prepared for the unexpected.

“They will build disaster recovery under minimum usage needs, understanding that if they fall into a disaster, it wouldn’t be forever,” he said. “These would be extraordinary circumstances.”

Laurentian also hired IBM last year for a $14-million project to install Wincor Nixdorf bank machines throughout Quebec and eventually outside the province as the bank continues to expand throughout eastern Canada. About two-thirds of all Laurentian bank machines will be replaced through the project, which is not expected to be fully complete until 2007.

Forcier said there had been some delays on the Wincor ABM project as it fine-tuned applications, but Chalifour said that IBM has helped establish application support and that the project rollout will continue on schedule.

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