WA utility inks $15.4 million IT services contract with CSC
- 22 April, 2008 10:47
The Western Australian government owned electricity network utility, Western Power, has signed a three year, $A15.4 million IT services contract with Computer Services Corporation (CSC).
The deal is part of a broader trend in Australia which has seen a long list of local companies outsource their mainframe operations.
According to Danny Willmott, CSC's director of mainframe infrastructure, its mainframe customer base has grown dramatically in the last three years from 3000 Mips to 11,000 Mips.
That's in addition to a further 9000 Mips for disaster recovery, which is good news for Australia.
The Western Power contract includes three one-year options and has a potential value of $21 million if all options are exercised.
It is the first IT outsourcing contract to be awarded by Western Power.
As a part of this contract, CSC will provide Western Power with mainframe operations and support services. In addition, Western Power's mainframe infrastructure support staff will transition to CSC in June, 2008.
Western Power CIO, Leigh Sprlyan, said CSC was able to offer a contemporary consumption-based pricing model that provides the flexibility for the utility to pay only for the mainframe capacity it requires.
Through this model, Western Power will be able to continue its critical mainframe services, while reducing costs as it decommissions mainframe applications over time.
CSC will migrate Western Power's mainframe processing to its Melbourne-based mainframe centre.
This facility provides mainframe processing services to a number of CSC clients including AMP, Coles Myer, Western Australia Police Service, Alcoa, Westpac and the Australian federal government.
The president of CSC's Australia operations, Nick Wilkinson, said the win strengthens CSC's presence in the region, and reaffirms the company's position as the largest provider of IT services in Western Australia.
"It also contributes to our growing list of utilities industry clients around the globe," Wilkinson said.
Mainframes still dominate the IT landscape and this is likely to continue due to its ability to handle major workloads and fit into a corporate environment where organizations are moving to fewer data centres.
According to Gartner large mainframe users have been increasing their mainframe environments, measured in MIPS (millions of instructions per second) over the past four years.
Most of these users will continue to increase their installed MIPS at a compound annual growth rate of 15 to 20 per cent through to 2009, Gartner estimates.
Not only is the mainframe secure, offering unparalleled availability, it also draws less power and cooling which is ideal for today's push toward Green IT.
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According to a whitepaper released by CSC earlier this year, by outsourcing the mainframe a company can typically save 20 per cent on their current in-house mainframe costs.
Companies that have their mainframes inhouse are usually paying more per MIP, according to the whitepaper.
This is because outsourcing providers like CSC can leverage global scale and attain savings with IBM and ISV vendors for hardware and software.
CSC estimates that on software alone, it can generate savings of about 40 per cent.
Research showing outsourcing deals inked in the Asia Pacific increased 43 per cent between 2006 and 2007 topping more than US$25 million, according to advisory firm TPI Inc.
The region accounted for 13 per cent of the global market, the first time market share has exceeded 10 per cent since 2002.
The compound annual growth rate for service providers in the region is 10.5 per cent, which is more than double the global rate of 4.5 per cent.
Part of this growth has been the extension of two existing contracts with CSC by the Department of Immigration and the Australian Electoral Commission.
Willmott said the Department of Immigration wanted its data replicated to a disaster recovery site which led to the establishment of a CSC data centre in Sydney.
He said the immigration department extended its mainframe and mid-range support while the electoral commission also extended its mainframe services.
The total value of the contract extensions are US$83.1 million.
Willmott said lower cost of delivery is the main driver behind this growth with the Sydney data centre supporting 73 large banks and insurance companies.
WA's Western Power is Australia's only dedicated transmission and distribution business and is responsible for the distribution of electricity in the South West Interconnected System (SWIS).
The SWIS consists of 89,700 kilometers of power lines, 800,000 power poles and 150,000 streetlights.
The utility has more than 2132 core staff, an asset base of nearly $3 billion and services nearly 890,000 customers.