IBM Business Consulting Services on Tuesday announced two major outsourcing agreements with Marathon Oil Co. and Williams to take over accounting functions, among other things, to enable the two energy companies to execute their core business plans. Marathon did not announce specific financial details, but Williams’ is worth $320 million, and 460 of its employees will transfer to IBM.

Marathon’s multi-million agreement will begin in August 2004. IBM will administer select accounting functions, including accounts payable, fixed assets accounting and production revenue accounting for U.S. operations. The scope of the work will include most of Marathon’s upstream accounting services and portions of Marathon Ashland Petroleum LLC’s accounting services.

“Marathon’s decision to work with IBM extends beyond simple cost savings,” said Albert G. Adkins, vice president, accounting and controller. “IBM offers an extensive knowledge base and global experience, which will be coupled with the application of industry-leading best practices, core competencies, efficiencies and technology beyond that which Marathon could provide alone.”

For Tulsa-based Williams, the IBM agreement, set to begin July 1, was designed to transform and manage the company’s accounting, finance and human resources, as well as manage key aspects of the energy company’s information technology (IT), including enterprise-wide infrastructure and application development. It also will help the company with accounts payable, fixed assets, general accounting, payroll, compensation and benefits administration. IBM business consultants will work with Williams under the seven-and-a-half-year agreement to further its application of state-of-the-art redesign to these processes.

According to Williams, transforming key business and IT processes will help the company reduce costs more quickly and at levels beyond what it projects it could accomplish on its own. Also, the arrangement is expected to improve Williams’ ability to adjust its support operations as business conditions dictate, while maintaining a high quality of service.

“With today’s agreement, we are well on our way to aligning Williams’ costs with our smaller, more focused business operations,” said CEO Steve Malcolm. “We expect the relationship to deliver significant cost savings over the next several years and allow us to better focus our resources on creating additional value for the company through our core natural gas businesses.”

Both agreements last until 2011. Ginni Rometty, managing partner of IBM Business Consulting Services, said the Marathon agreement would “leverage a range of IBM skills,” and said Williams’ agreement was “indicative of a new wave of business process transformation agreements for IBM with its clients, focused on delivering transformational business value in addition to cost efficiencies.”

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