Old Mutual and Nedbank have officially booted Internet Solutions by awarding a R1.8 billion contract for a shared network to be managed and operated by Telkom and Computer Sciences Corporation (CSC).
The two financial services groups (Old Mutual owns a substantial stake in Nedbank) say the deal should save them about R1 billion over the next five years, and the shared network is expected to significantly decrease network and telecommunication costs, improve business functionality and increase service levels.
Originally codenamed Project Merlot, the contract will be a convergence network as it is a single, multi-service network based on mainstream products and services, and will be managed by a single service aggregator (a single point of contact for all communication and services).
The network encompasses all areas of the wide and local area networks, and telephone voice services have been designed by the joint teams of CSC and Telkom, and will be installed over the next two years.
"By taking this route, Old Mutual and Nedbank will exploit the benefits of network convergence such as increased flexibility and reduced costs," says Old Mutual.
Also involved in the contract is black-owned IT firm Choice Technologies, which will support Telkom`s part of the contract.
The new arrangement means Dimension Data subsidiary Internet Solutions no longer holds the network management contract it inherited after it absorbed the DiData/Old Mutual virtual private network joint venture Omnilink in 2000 that had been managing Old Mutual and Nedbank`s networks since 1997. Nedbank and Old Mutual still each own 20% of Internet Solutions.
"Internet Solutions remains a strategic supplier in other areas, such as our online banking services," says Willie Scholtz, divisional director of group IT operations at Nedbank. "Relationships between us and them are very good."
Nedbank has already cut over to the new network and Old Mutual is due to make the jump next week.
"We are extremely pleased that the savings are expected to be achieved without job losses," says Old Mutual MD Roddy Sparks.
Savings imperative
Old Mutual expects to save more than R300 million over the life of the contract, with this year`s savings expected to be around R30 million. Old Mutual and Nedbank will achieve savings broadly in line with each company`s transaction volumes.
"This outsourcing contract will result in considerable savings for the Nedbank Group and highlights the value that can be unlocked through collaboration with Old Mutual. Nedbank expects to save R700 million over the next five years, with about R60 million being realised in 2005," says Nedbank Group CEO Tom Boardman.
"This network will shape and impact the telecommunications industry. It reflects Old Mutual and Nedbank`s IT leadership and enhances the reach and range of the services it can offer at many locations throughout SA," says Old Mutual CIO Theo Nkone.
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