Leading outsourcer Computer Sciences Corporation (CSC) must have breathed a huge sigh of relief last week after signing a further three-year outsourcing contract, worth a cool $48 million, with national insurance company MMI.
The agreement extends an existing relationship under which CSC had provided outsourcing services to MMI for mainframe and desktop services.
Effective next month, the outsourcing deal will see CSC take charge of MMI's IT services infrastructure which includes mainframe and midrange computing, desktop, help-desk and network functions. MMI will retain its infrastructure and architecture strategies.
CSC's new managing director and CEO, George Bell, was quick to point out that CSC scored favourably in other aspects of the tender, including its ability to offer flexible contractual arrangements such as usage-based pricing plans and improved service levels.
"MMI set some formidable requirements which we were able to meet. This new agreement consolidates the quality of service we've provided to MMI."
However, the new deal didn't come without some hard-hitting demands from MMI. For example, the insurer stipulated that the successful tender must deliver an immediate 10 per cent reduction on computer processing, network and ancillary costs.
According to MMI officials, such a reduction in operating costs would slash in the vicinity of $2 million off the organisation's existing information technology expenditure.
John Cullity, MMI's chief general manager System and Support, claimed CSC showed a greater willingness to work with the organisation on reducing expenditure and rationalising its diverse systems than did tender rival IBM Global Services Australia.
Another proviso, and a major concern for Cullity, was the outsourcer's decision to restructure its senior management team.
"We view this agreement as an expression of confidence in CSC's new management team led by Bell," Cullity said.
"The common view we held of CSC was that it needed to improve the level of service offered along with an ability to provide the cost savings we demanded.
"There didn't seem to be much clarity in the service CSC was offering throughout our previous relationship so it was vital that senior management made certain changes," Cullity claimed.
"CSC clearly provided a much more positive approach to our business the second time around. If it had not made those structural changes then we may have been forced to consider IBM GSA."