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John Lounsbury
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John Lounsbury, Managing Editor and Co-founder of Global Economic Intersection, provides comprehensive financial planning and investment advisory services to a small number of families on a fee only basis. He has a background which includes 34 years with a major international corporation, 25... More
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John B Lounsbury CFP
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Global Economic Intersection
  • Citi Tech Initiative Could Be Good News For IBM 0 comments
    May 21, 2009 11:46 PM

    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."

    and

    "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.

     

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