Farm Credit Canada rewrites outsourcing agreement to reflect growth

Farm Credit Canada has realized its move to a service-oriented architecture and some unexpected growth demanded a change in its relationship with a key outsourcing partner.

The company has signed a $36-million deal with ISM Canada, a subsidiary of IBM Canada, that will extend the relationship between the two firms by five years. ISM will be responsible for infrastructure services, system maintenance, storage, backup and recovery, mainframe and server upgrades, and server consolidation. The services apply across all FCC platforms, including mainframe, midrange and Windows-based Intel servers, the company said.

Paul MacDonald, Farm Credit Canada’s senior vice-president and CIO, said the company has changed a lot since it first started working with ISM, which brought over several Farm Credit Canada employees as part of the original agreement.

“We had our ups and downs for the first couple of years. There was a belief that the agreement was not meeting objectives we had set for ourselves,” he said. “All we really needed to do was step back and look at the agreement and be willing to make changes to support the business.”

One issue was Farm Credit Canada’s early adoption of a service-oriented architecture strategy, whereby it is consolidating services and using reusable software components to achieve greater integration among the various systems in its data centre. This requires considerable support from ISM, MacDonald said.

In July, Farm Credit Canada said it had lent $3.8 billion to agricultural businesses, with net disbursements of $3.3 billion. Its total lending portfolio grew by $1.1 billion to more than $12 billion, with net income of $170 million, Its return on equity is also up to 14.4 per cent, from 11.6 per cent in 2004-05. All these things have an impact on its outsourcing activities, McDonald added.

“Our original contract was based on modest growth as a company, but we  have just blown the doors off going along,” he said.

ISM Canada president Dan McMurtry agreed that the relationship between the two firms had to change. 

“They went through a period of very rapid growth. As a result, the contract that was written and the things that were important in it – they were starting to become different things,” he said.

The first agreement was built on infrastructure measures, McMurtry added, including the performance of its servers and operating systems. “That doesn’t translate into any end-user experience,” he said.

MacDonald said Farm Credit Canada’s sophistication as an IT organization has increased, and part of the benefits of working with ISM is having access to IBM expertise, even though its SOA project is based on BEA’s WebLogic.

“We’ve made a conscious effort to present to the organization one single view of IT, and not to talk about this part being ours, this other part being the outsourcing firm’s,” he said.

Comment: info@itbusiness.ca

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Shane Schick
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