Outsourcing company T-Systems SA's R2.58 billion deal with Old Mutual will change the way outsourcing contracts work, as it moves away from a traditional service level-based approach.
The companies this morning announced a new seven-year contract, Equinox, which covers delivery of IT support services to Old Mutual and Mutual & Federal. It includes a global service help-desk, mainframe, storage and end-user computing services.
Equinox replaces the R1.8 billion Rosa contract signed between the parties in 2008, which was not flexible enough in a changing environment. The new deal, implemented two years before Rosa was due to expire, sees Old Mutual and T-Systems take joint responsibility for delivering IT infrastructure, and sharing any upside.
T-Systems SA MD Mardia van der Walt-Korsten says the deal is ground-breaking as outsourcing deals are typically not between partners. She says the intention is that the relationship will extend beyond seven years and both parties are responsible for delivery. “For me, this is the model.”
Van der Walt-Korsten says the process kicked off 18 months ago and laid the basis for a different kind of contract that is value-based. She anticipates the relationship creating a new standard for outsourcing in SA, and generally.
Richard Boynett, CIO of Old Mutual's long-term savings (LTS) division, says: “A lot of people talk about partnerships, but we have the structure and framework that allows us to manage it.”
Alfons Joubert, acting LTS IT CIO for emerging markets, says Equinox moves Old Mutual into a new era in the way that services are supplied by partners. He says it allows the company to develop innovative services for emerging markets.
The initial Old Mutual contract was important in T-Systems SA's history, says Gert Schoonbee, VP of sales and deal executive, as it gave the company scale to use as a platform for other outsourcing agreements.
Traditional outsourcing agreements assume static environments for five or seven years and consider cost-savings, innovation and transformation, says Schoonbee. However, these contracts do not consider whether the platform will remain relevant, he adds.
Equinox is flexible and allows for innovation, as well as constant optimisation, says Schoonbee. He explains that the scope may change, and the value of the contract could also be amended.
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