Commbank drops Vodafone for Optus, re-signs EDS

The Commonwealth Bank of Australia (CBA) has announced it will enter into a new six-year, $573 million outsourcing contract with EDS and will replace Vodafone with Optus for its mobile voice services until 2009.

The announcement represents a shift to multi-source service relationships, and both deals result from competitive reviews and "significantly change" the structure of such relationships, according to the bank.

CBA CIO Michael Harte said the new arrangements will deliver more efficient operations and significant service improvements, and reduce costs across the enterprise.

"Moving to a new supplier for the mobile service will provide a higher level of service for end users within the bank, increased flexibility and associated accountability, with reduced overall costs," Harte said.

The extension of its IT outsourcing agreement with EDS Australia is specifically for the provision of mainframe and mid-range data processing services (collectively known as Enterprise Processing Services) for a period of six years to June 2012.

While the $573 million deal is significant, it is a far cry from the 10-year, $5 billion outsourcing partnership inked in 1997. Projects since 1997 include a refresh of 40,000 desktops, rationalizing 38 disparate office environments to two, upgrades to the ATM network, the CommSee customer management system, an Internet banking infrastructure replacement, and applications work for the bank's lending systems.

The CBA and EDS want to establish a new "service oriented relationship" that will see both parties work towards delivering service improvements and specific expense reduction initiatives.

"The signing of this extension is a cornerstone in improving IT service delivery across the bank," Harte said. "We have taken back the control through better governance and have set more meaningful business and customer service standards."

Harte said the departure from the old model is "meaningful" and it will fundamentally change the nature of the relationship, moving away from pure contract management to a joint "service oriented" approach.

"We have learnt a great deal over the last eight years and this new commitment from both parties will change the spirit and nature of our arrangements," he said. A spokesperson for the bank said the new agreement is only for the mid-range and mainframe environments, while the desktop support and other outsourced areas remain part of the old agreement, the bank will be looking at that part of business "as we go forward".

The bank also announced it will construct a new, greenfield datacentre in Sydney's west.

"This investment provides scope to grow [and] adopt new best practices and deploy internal and external processing resources in an open and contestable manner," Harte said. "Our systems infrastructure is highly distributed and we need to leverage opportunities in virtualization to develop world-class hosting and data services."

EDS Australia and New Zealand managing director Chris Mitchell was upbeat about the new contract, saying the extension was a "vote of confidence" in the existing relationship and the service EDS has delivered since 1997.

"We are embarking on a new, more collaborative future together," Mitchell said. "This agreement will underpin all future service provisions and any expansion of services between EDS and the bank."

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