FCC rewrites its outsourcing deal

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. The equipment includes IBM, HP and legacy gear.

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 (SOA) strategy, whereby it is consolidating services and employing 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 said. “Our original contract was based on modest growth as a company, but we have just blown the doors off going along,” he said.

Change needed

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 said, including the performance of its servers and operating systems.

“That doesn’t translate into any end-user experience,” McMurtry said. “The new agreement will see some increased requirement for leadership in terms of architecture and where they see the business going, what it means for the application group and our infrastructure. There’s also more governance.”

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.

Part of ISM’s role will be helping Farm Credit Canada determine the best way to reach its IT goals, McMurty said.

“They’re looking at a fairly major application change,” he said, referring to the SOA plan. “Some of those strategic elements (around SOA) play pretty core into the application direction they want to go. We need to integrate, plan and communicate better than ever before.”

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