Telstra announces $1.2 billion of services contracts

Stan Beer
Tuesday, 09 June 2009 03:33

Opinion and Analysis

IBM has lost out to EDS and Infosys in a $450 million of IT development and maintenance contracts with Telstra but has renewed a $745 million infrastructure agreement with the carrier. The deals give three of the major services suppliers a piece of the lucrative Telstra pie while locking out smaller local players and other global operators such as CSC and TCS.
 
According to Telstra, thee IT transformation program has included work in two key areas within IT: application development and maintenance (AD&M) and, infrastructure build, management and support.
 
Telstra announced that in a competitive tender it had awarded expanded application development and maintenance services contracts to EDS and Infosys, pushing out IBM, with a base spend of $450m over five years.

EDS, owned by HP, described its share of the deal, a five-year, $190 million contract, as one of the largest application management engagements signed this year in Australia. Its agreement also includes potential additional discretionary opportunities of up to $334 million, according to the company. Under the agreement, which runs through to 2014, EDS will provide applications development and management services for Telstra’s critical business applications.

According to Telstra, the incumbent IBM "remains a strategic partner in this domain" which appears to mean that the carrier is leaving itself open to still using IBM in a sort of panel arrangement with the other two services suppliers.
 
"The consolidated approach, via standardised contracts, enables greater efficiency in management effort and improves consistency of delivery and support. By working with fewer vendors, Telstra will streamline IT processes and deliver more effective and efficient service," a Telstra statement read.

Telstra also announced that it had renewed IBM's  IT Operations Services Agreement (ITOPSA) managing Telstra’s infrastructure, worth an estimated $745m over 5 years.

The agreement with IBM covers data centre mainframe operations, a proportion of midrange operations and maintenance.

IBM builds and manages Telstra’s servers, software and systems in what the company describes as Australia's largest non-government IT infrastrcture.
 
“EDS, IBM and Infosys are important IT transformation partners and we look forward to continuing our relationship,” John McInerney, Telstra CIO and GMD Information Technology said.

David Caspari, managing director of Australia and New Zealand at EDS, an HP company, said the deal aligns well with Telstra’s business goals.
 
“Expectations for today’s applications have multiplied – to deliver faster time to market, achieve better customer satisfaction, expand to new market segments, and improve business process and operational efficiencies. With deep expertise in applications services and strong knowledge of the telecommunications industry, EDS will enable Telstra IT to support the business’ needs.”
 
Infosys Australia CEO Jackie Korhonen welcomed the announcement as a reinforcement of Infosys’ strategic partnership with Telstra since 2003.
 
“This is a strong acknowledgment of Infosys’ ability to contribute strategic value to one of our top clients worldwide,” Ms Korhonen said. “We are excited to be part of Telstra’s IT transformation.”

“This is a significant agreement for IBM as it builds on our strong relationship of more than 20 years. Both teams (IBM and Telstra) have collaborated closely in the design of this new agreement. This is a great opportunity for us to build on the work we have been doing in Telstra’s infrastructure domain - combining the IBM software tools suite and IBM’s depth of technical knowledge to provide Telstra with a highly efficient IT environment,” said David Burns, IBM Managing Director -Telstra Account.