Australian lenders' mortgage insurance specialist Mortgage Guarantee Insurance Corporate Australia (MGICA) has renewed its five-year outsourcing contract with IBM Global Services Australia (IBM GSA) for a further five years.
A wholly owned subsidiary of AMP, MGICA provides lenders with insurance for $25 billion of loans in Australia and New Zealand. MGICA's customers are major financial institutions.
The insurer's contract with IBM GSA covers mid-range servers, business recovery services, wide area network communication services, and second level help desk.
IBM GSA runs MGICA's core business applications from the IBM data centre in West Pennant Hills.
MGICA first outsourced to IBM GSA five years ago having converted from Wang to an AS/400 platform in the early nineties.
Finding it difficult to handle staffing, availability, and necessary expertise for AS/400 in-house, MGICA entered into a contract with the then newly formed IBM GSA in June 1993.
Whilst the motivations for signing that first contract were internal, the drivers for renewing it recently were external, said Ian Graham, managing director, MGICAThe guarantee company is facing increased competition in Australia and New Zealand, and needs to keep up with the technological demands of customers he said.
Together with IBM GSA, MGICA is further developing its e-business system which will enable it to provide online links with customers.
"We want the capability to connect online with our clients using open solutions which are compatible with the diverse requirements in the finance industry," said John Hearne, head of business systems, MGICA.
"Our clients are continually focusing on improved business processes and lowering their overall transaction costs and we will be there with electronic mortgage insurance processes to assist our clients achieve their goals."
MGICA believes it is one step ahead of the game in some cases with development of its e-commerce capabilities.
According to Graham many of the financial institutions that use MGICA are presently focused on Y2K and are not yet ready to utilise MGICA's online alternatives.
"[They say] come back and talk to us in 12 months," he said.
Before renewing its contract with IBM GSA, MGICA market tested the service provider's offering, and brought in third-party consultants to evaluate contractual terms -- a process which added value to the contract, Graham said.
"Something we've built into the contract is access to IBM's senior consultants for a certain amount of time each year," Hearne said.
"This way we can utilise their experience in the areas where we need it most, whether it is developing a new business process, examining a particular project, or looking to develop future operations."
MGICA also sought advice from parent company, AMP, which agreed that renewal of the contract was the best strategy.
MGICA has around 100 employees making it a small but strategically important client for IBM GSA.
IBM GSA general manager and CEO, Ed Kilroy said that small and medium-sized enterprises make up almost 30 per cent of IBM's services business, and are the fastest growing sector of the company's services business.
The company defines small to medium-sized enterprises as organisations with less than 1000 employees.