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Datacom Closes Outsourcing Deal, Ousting IBM

By ES outlook

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Datacom has signed a $242 million deal with the federal Department of Health. This means that IBM has now been ousted after 15 long years as the partner. The final signatures on the five-year infrastructure and support contract were inked yesterday.

IBM came onboard back in 2000, and there had been six renewals thus far. The first five-year deal was worth $350 million. Health Secretary Martin Bowles today indicated that the new deal represented a structural departure from traditional IT services outsourcing models. The partnership will be structured around an outcomes-based model and consumption-based pricing. Accordingly, the annual cost of the new arrangement appears to represent a significant reduction on the previous deal. With emphasis on typical IT services diminishing, the role of Datacom in the deal has been made clear. The deal covers the provision, maintenance and refresh of all hardware and software needed to deliver on the agreed outcomes.

Another company handed a pink slip by this deal is Accenture. Previously, Health department had sourced a range of enterprise data warehouse services. These services will also be absorbed now by Datacom. The IBM and Accenture deals will expire at the end of June this year.

Datacom CEO Jonathan Ladd welcomed the win after what he described as a "fiercely competitive" tender process. The deal adds to Datacom's Canberra footprint. The company recently took over IT services at CrimTrac, and counts significant deals at Customs, the Department of the Environment, ATO, ACCC, NHMRC and Airservices Australia.

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