IT Optimization Update by Dan Fallon
As a wrap up to this busy month, I’d like to provide an update on our IO activities. In early October, IBM provided Navistar a solution and pricing that was significantly different from its original bid. Prior to that, HP had submitted an unsolicited bid and revised solution, and for a time we discussed that offer with HP. We refocused our discussions to IBM when they followed up with an updated solution and a compelling offer. During the last few weeks we have taken time to better understand IBM’s offer, which now includes a data center migration.

Our plan is to move ahead with IBM and outsource these services:

Data center operations
Remote operations
Production DBA (Development will be retained by Navistar)
Help Desk
Mainframe, server and storage management
A couple weeks ago, the Executive Council, Finance Committee and Board of Directors reviewed the IO business case. No concerns were raised, and we have their support to proceed toward contract finalization. We expect to have a finalized contract soon and will conduct an All IT Employee meeting around the contract signing date.

As I have mentioned, we have been focusing on business case, risks, and contract negotiations. This has taken more time than anticipated because the addition of the Brookfield data center migration required further analysis and negotiation. Our plans now call for migrating out of Brookfield by 2014 to one or more IBM data center facilities.

Our near-term plans include:

Navistar and IBM finalizing the contract and starting detailed transition planning in November
IBM conducting a town hall to discuss potential employment opportunities in November
IBM interviewing self-nominated employees in December and extending offers soon after
Formal transition activities should start in early January and conclude at the end of June. We will share transition plan details as soon as they’re finalized. We understand the impact this will have on some of our people, and we will share information as quickly as possible so our people can make appropriate decisions.

While this process has taken longer than expected, spending this extra time with IBM has positioned us to have the best possible solution for Navistar. Our goal was to come out of this with deeper insight into how we operate and what we can do to simplify our IT infrastructure, improve our service delivery, and increase our productivity. IT must continue to change to meet the demands of an increasingly global, fast-paced, and competitive world -- just as the rest of our Navistar businesses have been challenged to do. And we need to be on a clear path that positions us to continually optimize our work so we can support the significant business growth Navistar intends to achieve.

While uncertainty is inevitable in situations like these, we have worked to keep you informed and to answer your questions as best we could. As we move into this next phase -- transition -- we remain committed to maintaining an open dialog. If you have any questions, please contact me or any member of the IT Leadership team.