IBM Selected As Technology Partner for Sumitomo Metal Industries, Ltd.

$660M Contract Over 10 Years

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Tokyo, Japan - 13 Apr 2000: -- IBM today announced that Sumitomo Metal Industries, Ltd. (SMI) in a move to drastically reform its information systems and develop new e-business solutions, has selected IBM Japan to manage its IT systems in a ten-year deal worth over $US660 million.

In outsourcing its information systems to IBM, SMI has decided to undertake major reform of its information systems to allow it to better respond to the demand for information internally and externally; to achieve more efficient systems operations and to utilize electronic networks to help it manage its business.

IBM, through its services arm IBM Global Services -- the world's largest information technology services company, will be responsible for the development, maintenance and operation of SMI's existing steel production, sales, distribution and administrative systems with the aim of helping the company improve productivity, integrate hardware and streamline and standardize software.

Mr. Michio Kubota, General Manager, Information Systems department, SMI Sumitomo Metals, said that SMI wants to develop an information system that will meet its future needs in the networked era.

"Working with IBM will enable us to build an integrated information network for systems that are currently dispersed throughout the company. In addition we will utilize IBM's leadership in IT to link users, trading companies, steel service centers and affiliated companies via an electronic network," he said.

Mr. Takao Endoh, General Manager, Sector Services, Industrial and Distribution Sector, IBM Global Services Japan, said that organizations around the world are finding that e-business solutions that put common processes such as payment systems and Supply Chain Management onto the Internet are powerful tools for transforming business.

"IBM will work with SMI to improve current IT systems and help implement e-business solutions that will allow SMI to manage its business even better than it currently does," Mr Endoh said.

The contract commenced this month and IBM and SMI formed a joint venture company to manage the contract.

Sumitomo Metal Industries, Ltd. is one of the world's largest steel manufacturing companies with products that include steel sheets & plates, steel pipes, construction materials and railway products. In particular it is a world leader in technology for seamless pipes used in areas such as oil drilling. The company merged with Sumitomo Sitix Corp. in 1998 and is actively developing operations in other engineering and related fields, as seen in its steady growth in sales of silicon wafers used in semiconductors. Total sales for fiscal 1999 are expected to be over $US8.5B (Yen910 billion) for the parent company and over $US13.2B (YEN1,420 billion) on a consolidated basis.

IBM Global Services is the world's largest information technology services provider, with 1999 revenues of over $32 billion. Services is the fastest growing part of IBM, with more than 140,000 professionals serving customers in 160 countries. IBM Global Services integrates IBM's broad range of capabilities -- services, hardware, software and research -- to help companies of all sizes realize the full value of information technology. For more information visit http://www.ibm.com/services.

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About the Joint Venture:

JV company name: IS Information System Co., Ltd

Location: Tokyo

Capital: $US280,000 (30m yen) - IBM Japan 65%, Sumitomo Metal Industries 35%

President: Hitoshi Yamaoka (formerly Director, SO Project, Global Services, IBM Japan)

Establishment: March 29, 2000

Start of operation: April 1, 2000

Employees: approx. 420 (mostly seconded from Sumitomo Metal)

Business description: IT development, maintenance and systems operation based on the outsourcing contract between Sumitomo Metal Industries and IBM Japan.

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