IBM has extended its IT infrastructure deal with Australian giant Westpac for a further five years, quashing speculation that the bank was preparing to reverse away from mega-outsourcing contracts in favour of tactical best-of-breed arrangements.
Under the new deal, IBM will hold prime responsibility for the operation of Westpac's key infrastructure services, including data centre, mainframe, midrange, storage, desktop, print and security operations.
In November last year, Westpac CEO Gail Kelly suggested that the banking industry's fixation with mega outsourcing deals was drawing to a close, firing speculation that the bank's decade-long relationship with IBM was in jeopardy.
Announcing the new deal with IBM on Friday, the bank's technology chief Bob McKinnon says: "We've jointly approached commercial negotiations in the right spirit, collectively shaping this new IT services contract which will drive a very different relationship and set us up for the future - aligning our companies to a shared vision, strategy and values.
In renewing the deal for a shorter five-year period, McKinnon has moved to mitigate the risks from a major upheaval as the bank implements its five-year IT transformation programme. The new contract also comes with a number of safeguards to ensure high quality service levels, including a "rigorous" vendor management framework, clearer service and metrics requirements and more transparency and flexibility in pricing.
McKinnon says the bank has also written more flexibility into the terms, with Westpac taking greater accountability in the design and management of IT services so that it has the ability to use other suppliers or software where appropriate.