GENERAL COMMITTEE
TO:	Mayor and Members of Council
FROM:	James Allen, Chief Information Officer
PREPARED BY:	Sugun Rao, Technology Manager
DATE OF MEETING:	2006-January-23
SUBJECT:	IBM Offer for Discounted Information Technology Products.

RECOMMENDATION:

THAT the report dated January 23, 2006 entitled “IBM Offer for Discounted Information Technology Products” be received;

AND THAT staff proceed with the Tendering process for purchases to meet 2006 server hardware requirements.

PURPOSE:

On October 17, 2005 a presentation from IBM on their Offer for Discounted Information Technology Products was received by the General Committee. It was requested that staff compare the discounted IBM pricing for the Town with that offered to other municipalities by IBM or other vendors for a similar hardware configuration.

The purpose of this report is to provide the results of the staff investigation and to recommend that staff proceed with the procurement process in order to obtain 2006 server hardware requirements.

BACKGROUND:

In June 2003, a request for proposal process was completed by the Town of Markham to select a vendor to provide personal computers (PC’s) and value added services to the Town. The successful supplier was IBM Canada Limited. In accordance with this arrangement, IBM supplied PC’s and value added services based on the Town’s information technology needs and priorities at a pricing discount of 15% of the undiscounted price listed on IBM’s web site.

Since the execution of this agreement, IBM has consistently provided quality products and services. IBM has contributed to the success of major information technology initiatives within the Town including the Lifecycle Replacement Program for the Town’s PC’s and a multi-year Information Technology Strategic Plan.

IBM has also provided many informative technology discussions and knowledge exchange sessions over the past two years.

On October 17, 2005 a presentation from IBM on their Offer for Discounted Information Technology Products was received by the General Committee. See Appendix A – IBM Letter of Offer.

This offer from IBM seeks to extend the previous agreement to other Information Technology products and take advantage of discounted rates offered by IBM. The scope would now be expanded to include IBM Xseries servers, Blade Center servers, all Xseries server options and IBM storage products. This range of products encompasses a significant portion of the infrastructure components required to support the Town’s information technology business solutions now and in the future.

Significant cost savings could potentially be achieved through this offer from IBM, dated October 4, 2005. As a government entity, the Town is already benefited by receiving Government pricing through most vendors including IBM. IBM has guaranteed at least an additional 20% discount for Information Technology products (excluding PCs). This would provide the Town with additional savings normally available only to IBM’s large enterprise customers. In addition, the terms of IBM’s offer would guarantee the stability of the price and discount structures over the next 18 months.

IBM has guaranteed that all terms and prices for Information Technology products provided to the Town will be equivalent to or better than the terms and prices offered to any of its other municipal public sector customers in Ontario for the same products in like quantities and in the same time frame.

It was requested that before proceeding with the acquisition of replacement server hardware, staff compare the discounted IBM pricing for the Town with that offered to other municipalities by IBM or other vendors for a similar hardware configuration.

Staff compared the IBM pricing with that offered to other municipalities by other vendors for a similar hardware configuration. It was found that the offer from IBM, dated October 4, 2005 compared favourably. However it was not possible to compare price based on similar volume, as the other municipalities have been purchasing servers on an as needed basis and did not appear to receive volume discounts.

However, the server market is quite competitive and the only way to ensure that the Town obtains the best value is through a public tendering process. This process will allow staff to compare bids from a number of vendors, make a selection based on best value, and remove any doubts regarding the appropriateness of the server selection.

Therefore, it is recommended that staff proceed with the tendering process to meet 2006 server hardware requirements.

FINANCIAL CONSIDERATIONS:

Competitive tendering process would ensure the Town obtains best value. It should allow us to proceed with 2006 server hardware replacement of 17 servers.

The funds for server hardware replacement in the amount of $308,000.00 exclusive of GST are included in the ITS Capital Budget account No. 49-5350-6291-005 and 49-6150-6738-005.

BUSINESS UNITS CONSULTED AND AFFECTED:

The Purchasing Department was consulted and have reviewed the IBM Letter of Offer.

ATTACHMENTS:

Appendix ‘A’ – “IBM Letter of Offer”

James Allen Chief Information Officer

Andy Taylor Commissioner of Corporate Services