BHP Billiton is proving a nightmare for Computer Sciences Corporation after the mining giant outsourced its entire wide area network requirements to Equant.
The announcement confirms earlier reports (ARNnet, March 21) that BHP Billiton had chosen Equant over CSC for the provision of WAN services.
In May 2000, CSC purchased BHP's spin-off IT services company, BHP IT, which included the transfer of BHP IT's 1,700 staff. The deal also included a seven-year contract to provide outsourced IT services for the mining company, estimated to be worth more than $700 million.
At the time, the purchase was designed to reduce BHP's IT operating costs by 20 per cent. By March 2001, CSC was forced to cull a number of ex-BHP IT staff in response to a weakening IT economy.
However, with the merger of BHP and Billiton, CSC was forced to re-tender for the WAN services component in December last year.
"When BHP Ltd and Billiton Plc merged in June 2001, the group quickly recognised the need for a single global provider to manage its network," said Cassandra Matthews, BHP Billiton's chief information officer, in a statement released yesterday.
Equant has pounced on the opportunity, signing a three-year, $US27 million agreement with BHP Billiton, to migrate its current frame relay network (managed by various service providers around the world) to a single, virtual private network based on Equant's flagship IP VPN offering.
Richard Knott, Equant Australasia's managing director, said the majority of the migration will be completed in the first half of the year.
The deal has sparked a lot of speculation, with reports in ARN sister publication Computerworld suggesting some CSC employees thought the company's relationship with BHP Billiton was "in chaos".
According to a source in contact with ARN, CSC is currently reviewing the tender to work out what went wrong.
CSC and BHP Billiton were unavailable for comment at press time. However, BHP Billiton's Matthews said: "Equant was able to deliver [the services] at a competitive price, which will result in significant cost savings for BHP Billiton and positions us well to meet the future network requirements of the group."