Canada Post to create IT service firm

Canada Post Wednesday said it would create a $200 million IT services company that would manage its own infrastructure as well as its affiliated companies by early next year.

The yet-to-be-named firm will be a mid-sized organization serving Canada Post, Purolator Courier Ltd. and Progistix Solutions. Montreal-based CGI has entered negotiations to help Canada Post form the new entity.

Canada Post spokesman John Caines said it was not clear exactly how the formation of the new organization would affect the company’s existing 300 IT staff.

“We’re looking at bringing people over from our IT operations at Canada Post and others,” he said. “But we have to see where the negotiations go to see where everything ends up.”

The new company will handle the Canada Post companies’ desktop and application support while developing new products and services which it will offer to the global market, Caines said. The company first put out a request for proposal (RFP) in March 2000.

“We realized we had to become more responsive as an organization to IT services so that we could adapt to changes in the marketplace,” he said. “There’s also a significant business opportunity here, particularly to other postal organizations around the world.”

While separating IT is a relatively new phenomenon, Canada Post’s venture is the latest example of a mail service teaming up with the private sector for a joint project. Doutache Post works with Credit Suisse for online securities and trading, for example, while Swiss Post has a similar arrangement with Banquo Cantonale de Vaud.

CGI spokeswoman Eileen Murphy said the new company would be launched with a president and staff in the new year, but an exact timeline was difficult to pin down.

“We’ve never delivered service for the postal industry,” she said. “We were up against all the biggies. The net kept getting smaller and smaller, and then finally we got it.”

Caines said that while the management structure is still not ironed out, CGI will have an exclusive role in shaping the new company.

“We put out a pretty broad net for our RFP,” he said. “What we were looking for, CGI met, and we’re going to do the negotiations with them alone.”

CGI won the bid based on its IT expertise, the overall financial value that it can put forth and its coast-to-coast presence, Caines added.

The only project which might compare to the Canada Post project is a joint IT venture CGI created for Lotto-Quebec, called Nter, in 2000.

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