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Aussie Road Agency Breaks Up A$20M IBM Outsourcing Deal

Aussie Road Agency Breaks Up A$20M IBM Outsourcing Deal

After nine long years together in the outsourcing sack, The Roads Corporation (VicRoads), Australia's second largest traffic authority, has revealed it will break up its A$20 million IT outsourcing contract with IBM Global Services Australia (GSA) in favour of three smaller, best-of-breed bundles.

While steering clear of any formal divorce announcement, VicRoads says it wants to start seeing other vendors almost immediately, with all three bundles to be put out to market over the next few months and expressions of interest to be announced within two weeks.

While IBM will certainly not be excluded from bidding for the new contracts, there is little doubt that the romance of wholesale outsourcing is not what it was a decade ago. John McNally, VicRoads' general manager of IT&T strategic development, tried his best to be diplomatic about the situation, saying: "This isn't so much about us being unhappy with IBM, but we reckon that after this length of time there are other opportunities to be considered. We're opening up to what the marketplace is prepared to bid on this (series of projects)."

"We've considered the risk of transition (to other providers). It's part of standard government policy to revisit sourcing arrangements. This organisation has always looked for best of breed solutions."

Describing what the new VicRoads 'smart-sourcing' approach will consist of, McNally said, "Number one bundle is a hosting and support service (for the applications) of our registration and licensing systems. Currently that service is delivered by two entities."

"The second bundle is a hosting and support service for our ERP (enterprise resource planning), which is the Mincom suite. The third is a managed service for our data communications and networking requirements, or telecommunications. It may include potentially voice."

Asked what he wants to see after almost a decade of meat and potatoes, McNally says he knows what he wants to see from vendors: "The value has to be there. There has to be a very good price, but there are also things like innovation. Contracts that were written in 1993 tended to be very IT-input focused and didn't allow for innovation from a business sense.

"We are looking for a pricing model that is business-output-focused; breaking up the monster contract into small pieces to target best-of-breed solutions.

Other services, such as desktops and helpdesk, will stay in-house for the time being. "We decided to hang on to (our desktops) in 1994, and we revisited it as part of the strategy development, but there's just too much bad news about outsourced desktops out there in the marketplace," McNally said, adding that an upgrade of Win98 to XP would occur over the next 12 months.

A spokesman for IBM was unwilling to comment, but said, "IBM enjoys a strong relationship with VicRoads and will continue to support its service requirements."

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