IBM and Siemens Business Services to Modernize IT for the German Federal Armed Forces

Market Wire, December, 2006

The German Federal Armed Forces have commissioned a consortium consisting of Siemens Business Services (SBS) and IBM (NYSE: IBM) to modernize and manage its non-military information and communications technology. The 10-year contract is worth approximately 7.1 billion euros including value added tax and will go into effect immediately. Through the HERKULES project, the German Federal Armed Forces will bring their data centers, software and applications, PCs, telephones, and voice and data networks up to the latest standard.

A company called BWI Informationstechnik GmbH (BWI IT), which is based in Meckenheim near Bonn, has been set up to supply the relevant IT services. SBS and IBM -- who are equal partners in the consortium -- together hold 50.1 percent of the shares, while the Federal Government holds 49.9 percent.

As part of the process of modernization, IBM and SBS will support the German Federal Armed Forces in revising workflows and replace the software currently in use with standard software. Together, they will also set up a help desk for users. Within the project, IBM and SBS will focus on these distinct areas:

IBM will be responsible for modernizing both the applications and the operation of the data centers. In this context, individual and standard software (SAP), web-based applications belonging to the intranet of the German Federal Armed Forces, and communication programs such as Lotus Notes will be maintained. In addition, there will be a PKI (Public Key Infrastructure), so that documents sent electronically can comply with signature and encryption regulations.

SBS will be responsible for operating and modernizing the decentralized systems at more than 1,500 locations in Germany. These will include some 140,000 PCs, 7,000 servers, 300,000 fixed-network telephones and 15,000 mobile phones. Activities will also include managing local and inter-regional data networks and voice networks.

IBM has been an IT partner of the German Federal Armed Forces for almost fifty years. "With HERKULES, the German Federal Armed Forces are going for innovation and transformation. The close cooperation between employees of the Federal Government and industry, working together in integrated teams, will ensure that this important project is brought to a successful conclusion. The ongoing regeneration of the systems will keep information and communications in the German Federal Armed Forces at the leading edge," explains Rudolf Bauer, Executive Director of IBM Germany, and the person responsible for the company's IT service business.

This cooperation between the German Federal Armed Forces and industry is currently the largest public-private partnership (PPP) in Europe. Going forward, up to 2,950 German Federal Armed Forces IT employees will be working within the project. Says Jürgen Frischmuth, a member of Group Executive Management at Siemens Business Services: "As Siemens, we are not only bringing comprehensive expertise in IT and processes to this project; we are also contributing the experience we have gained in many successful partnerships between the state and business, both at home and abroad." SBS has been a partner of the German Federal Armed Forces for many years.

Siemens Business Services is an internationally leading IT service provider. This Siemens Group offers services all along the entire value chain -- from consulting to systems integration, right through to the management of IT infrastructures. Thanks to its comprehensive know-how and sector-specific expertise, the company provides measurable added value for its customers. With regard to outsourcing, Siemens Business Services is among the top ten providers worldwide. With around 34,000 employees, the Group posted sales in fiscal 2006 (ending 30 September 2006) of EUR 5.2 billion, 75 percent of which was achieved outside the Siemens organization. Further information at: www.siemens.com/sbs

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Media Contact: Adam Emery IBM Media Relations 917-472-3283 adame@us.ibm.com