Western Power outsources $15m IT to beat skills crisis

CSC has been awarded an outsourcing contract worth up to AU$21 million by West Australian electricity provider Western Power as the utility looks to trim costs and beat the skills shortage.

CSC revealed today that it has signed a three-year IT services contract with the state government-owned electrical utility in a deal worth an initial AU$15.4 million, following the company's decision to outsource its "commodity IT services".

According to CSC, the contract includes three separate one-year options which, if exercised, would boost the value of the deal as high as AU$21 million.

"IT outsourcing has always been on the agenda for us," said Western Power CIO, Leigh Sprlyan, "but up until April 2006 we had been focusing on disaggregating into four separate companies."

Sprlyan told ZDNet.com.au today that the company had decided to outsource its commodity IT operations such as desktop support and mainframe operations in particular as the in-house team looks to direct its attention to project management, network architecture and "those areas which add most value to the business".

"We're in the process of replacing a lot of in-house developed mainframe legacy applications with off-the-shelf Unix options, we just don't want to be left with a stranded asset," he said.

Western Power had for some time been seeking to shift its mainframe pricing model from its current fixed arrangement to a variable cost model, Sprlyan said, adding that this had been one of the "primary reasons" for outsourcing the utilities IT.

"When we looked at what we were doing, desktop and mainframe services were something which seemed like great candidates for external providers who run these services to economies of scale, and can provide us the service on a consumption basis," he said.

Sprlyan claimed the decision was also borne partly out of staffing issues, saying the utility was having difficulty competing with West Australia's large mining companies in attracting skilled IT workers.

"We're operating in a very tough job market, and it's difficult to attract skills when you're competing against those [mining] companies, so we decided to hand over mainframe services to someone better equipped to look after them rather than seeking to augment with more individual staff," he said.

Western Power's mainframe services staff will move to CSC as part of the agreement, with Sprlyan saying one of the deal's major benefits was to "ensure the continuity of careers to existing staff".

While still in the planning stages, Sprlyan said that CSC and Western Power had commenced the three-month transition program, expected to be complete by June, which will see Western Power's Perth-based mainframe processing migrated to CSC's Melbourne mainframe centre.