International Business Machines Corp. (IBM) and CFAO Technologies, IBM’s partner in West Africa, have been chosen by the Cameroon Ministry of Finance to upgrade and secure the payroll process of government employees in the country.
The Cameroon Ministry of Finance intends to use IBM’s mainframe and storage technologies to provide the necessary support to improve the efficiency of the whole payroll processing system in the country. The implementation of IBM’s main frame technology is expected to improve performance by 200%, while reducing operating costs by an estimated 30%.
The Ministry of Finance in Cameroon will also be using various IBM software such as IBM Lotus Notes and Lotus Domino for analyzing payroll management to facilitate better working and decision making.
IBM’s mainframe system was recently deployed by the Customs Directorate of Senegal Ministry of Finance, which deals in imports & exports.
IBM mainframe technology has also been selected by other organizations, such as the First National Bank of Namibia, Comepay in Russia, Kazakh Rail, HeiTech Padu in Malaysia, China Internet Network Information Center, Korea’s BC Card and Korea’s Dongbu Insurance. The recent additions in the form of government ministries in Cameroon and Senegal further strengthen IBM’s position in the government vertical.
IBM has been gaining a lot of traction in emerging markets, with many government agencies from different countries in the Asia-Pacific and African regions choosing IBM services and technical support as their mainstay. This has ensured a steady flow of orders and market share gains across regions.
IBM expects these growth markets to drive revenue and increase growth in 2011 and beyond.
All these positives notwithstanding, we have a Neutral recommendation on IBM due to currency fluctuations, European weaknesses, decreased service contract signings, slower-than-expected IT spending growth and increasing competition from Microsoft Corp. (MSFT), Hewlett Packard Co. (HPQ) and EMC Corp (EMC).
We currently have a Zacks #3 Rank for IBM, which translates into a Hold rating in the short term (1-3 months).
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