It has been reported that Citi Group (NYSE:C) intends to consolidate many billions of dollars worth of IT systems and operations. Who is the world's largest system integrator? None other than IBM (NYSE:IBM).
Francesco Guerrera writes in ft.com :
"Citigroup is ramping up efforts to slash its huge technology costs, with the bank’s management believing it can save significantly more than $1bn in 2009 by integrating hundreds of systems that have been separate for years."
Guerra also states:
"Citi had originally estimated it could save $3bn over three years by rationalising its operations and technology functions, which employ 140,000 people, including 25,000 software developers – more than many information technology companies."
"Citi does not disclose its exact operations and technology costs but regulatory filings show that IT and communication expenses were $4.9bn in 2008. Operations costs are believed to amount to several billions more."
If IBM does get to do this job, it could be a revenue booster of 1% or more annually over the next couple of years.
Disclosure: The author has a significant long position in IBM stock.