United Technologies turns over purchasing to IBM
SOMERS, N.Y., June 29 (Reuters) - United Technologies Corp.
plans to announce on Monday an agreement in which IBM Corp.
will handle key purchasing functions for United as part of an
effort to slash $750 million in costs by the year 2000.
The companies said United Technologies has awarded IBM's
Global Services unit its first contract for procurement of
goods and services using a new, fully integrated IBM online
purchasing and payment system.
Financial terms of the deal were not disclosed.
Under the contract, IBM will take over corporate purchasing
activities outside of the United Technologies' core production
floor activities -- contracting with outside vendors for a
range of products and services.
As examples, marketing and advertising services, computer
equipment, human resources and everything from building
security and construction to airline and hotel travel
reservations would be covered, an IBM spokesman said.
"Our agreement with IBM is a critical step toward our goal
of cutting our purchasing costs by $750 million," Kent Brittan,
United Technologies' vice president of supply management, said
in a statement.
The sourcing and procurement program is part of IBM's new
Business Process Management services. United Technologies is
the first client for the new offering.
The Internet-based service relies on Lotus Notes, IBM's
integrated software system designed to manage inter-office and
external ccommunications throughout a corporation.
IBM Global Services will operate the purchasing system,
manage relationships with suppliers and administer the entire
process -- from taking and fulfilling requisitions to issuing
authorizations for payment.
The United Technologies purchasing system is an outgrowth
of a similar project developed by IBM to handle its internal
purchasing operations.
"This agreement with UTC is an exciting example of how IBM
is leveraging its own successful re-engineering to create value
for our customers and new growth opportunities for IBM," said
Karen Riley, head of the IBM Business Process Management team.
Hartford, Conn.-based United Technologies is a $24.7
billion company in the aerospace, building and automotive
industries. It products incldue Otis elevators, Carrier air
conditioners and Pratt & Whitney aircraft engines.
IBM Global Services is the fastest-growing segment of IBM,
accounting for about $26 billion, or one-third of the company's
overall 1997 revenues of $78.5 billion.
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