Centrelink doles out AU$141 million to IBM

IBM has secured a two-year, AU$141 million extension on its mainframe contract with Centrelink, boosting the term of the deal to six years with a total value of AU$401 million.

IBM has secured a two-year, AU$141 million extension on its mainframe contract with Centrelink, boosting the term of the deal to six years with a total value of AU$401 million.

Initially inked in 2005, the deal sees IBM providing the welfare agency's backend processing requirements, including its mainframe systems, software, maintenance, and disaster recovery requirements.

One of the key improvements Centrelink has looked to IBM for, according to Centrelink's deputy CEO of IT operations, Brendan Sargeant, is the ability to deliver extra processing capacity on demand.

Sargeant said the "major additional component ... allows us to effectively protect the integrity of Centrelink's systems in urgent and unforeseen situations requiring extra short-term mainframe capacity."

Centrelink has consistently increased its spend with IBM over the past several years -- the original value of the contract, according to the government, was AU$16 million. The total value of the contract over its six-year lifespan has now reached AU$401 million.

The IBM deal stands alongside Centrelink's IT refresh program, which, according to the latest audit by the Australian National Audits Office, has brought triple the savings the agency initially expected: from AU$184 million to AU$405 million over the past five years.

The refresh was expected to deliver savings by improving the ability of the organisation to verify, in real time, a welfare claimant's financial circumstances. Additional savings were unexpectedly derived from reductions in welfare payments which resulted from data matching activities identifying improvements to claimants' circumstances.

However, some projects have been delayed, such as Centrelink's business intelligence and data warehousing initiative. Last year Centrelink inked a AU$9 million deal with Cognos to provide a business intelligence platform for the department but, according to the ANAO audit, the rollout will be delayed because of difficulties populating its data warehouse. Because of this, areas such as its purchasing department will need to wait some years before being able to access accurate information.

The delays also impact some of Centrelink's key government partners. The Department of Families, Housing, Community Services and Indigenous Affairs the Department of Education and Workplace Relations depend on Centrelink to deliver programs which affect these departments' operations.

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