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CBA signs up providers for new outsourcing era

update EDS has won a AU$573 million extension on its mainframe and midrange services contract with the Commonwealth Bank (CBA) as the institution moves to recast its supplier relationships once a decade-long Big Bang outsourcing deal between the two expires. The CBA announced the mainframe and midrange data processing services component of its longstanding agreement with EDS, signed in 1997 for AU$5 billion, would be extended for six years to June 2012.

update EDS has won a AU$573 million extension on its mainframe and midrange services contract with the Commonwealth Bank (CBA) as the institution moves to recast its supplier relationships once a decade-long Big Bang outsourcing deal between the two expires.

The CBA announced the mainframe and midrange data processing services component of its longstanding agreement with EDS, signed in 1997 for AU$5 billion, would be extended for six years to June 2012. The 10-year outsourcing arrangement officially expires in October next year.

"The signing of this extension is a cornerstone in improving IT service delivery across the bank," said the bank's chief information officer Michael Harte.

"We have taken back the control through better governance and have set more meaningful business and customer service standards. We are making a meaningful departure from the old model. It will fundamentally change the nature of our relationship, stepping away from pure contract management to a joint relationship focused on a service oriented approach.

"We have learnt a great deal over the last eight years and this new commitment from both parties will change the spirit and nature of our arrangements."

The bank said the extension, as well as the awarding of a managed mobile voice services contract to Optus until 2009, were significant shifts in the transition to a multi-sourcing strategy.

"Moving to a new supplier for the mobile service will provide a higher level of service for end users within the bank, increased flexibility and associated accountability, with reduced overall costs to the bank," said Harte.

These services had been provided by Telecom New Zealand company Gen-I, a Vodafone reseller.

"Vodafone didn't have the level of service we were looking for," Harte said in a conference call following the announcement.

The bank also said in its statement it was investing in a greenfields datacentre development in Sydney's west.

"This investment provides scope to grow, to adopt new best practices and deploy internal and external processing resources in an open and contestable manner," said Harte.

"Our systems infrastructure is highly distributed and we need to leverage opportunities in virtualisation to develop world class hosting and data services."

A number of large organisations such as Optus, IBM and the Reserve Bank already have backup sites in the area.