T-Systems SA today (Tuesday) signed what is considered to be the biggest outsourcing deal in the history of SA's financial services sector. The contract, known as Project Rosa, is with the Old Mutual Group.
The five-year, R1.8 billion contract is for the supply and maintenance of IT infrastructure to the Old Mutual Group, comprising Old Mutual SA and Mutual and Federal. T-Systems edged out outsourcing rival IBM and incumbent service provider Computer Sciences Corporation (CSC) SA to secure the deal.
In terms of the total contract, 70% is dedicated to Old Mutual, while 30% is focused on Mutual and Federal. The scope of the deal covers data centre management, disaster recovery, service desk and management toolsets, and the provision of hardware and software.
Speaking at the signing ceremony in Sandton, Johannesburg, T-Systems CEO Mardia van der Walt-Korsten said the company decided about 10 years ago to focus on the financial services sector. The signing of this deal positions T-Systems as the number one service provider in this space, she commented.
"We will be providing an in-depth information and communication technology solution for Old Mutual SA and Mutual and Federal. This is one of the largest partnerships in the local financial services sector, and we are ready for the challenge."
David Entwisle, executive GM of IT at Mutual and Federal, says Project Rosa is a departure from previous outsourcing contracts for the short-term insurer. Until now, the company merely outsourced its mainframe environment, but needed a broader strategy to deal with increasingly fragmented legacy systems.
Rigorous process
Project Rosa is part of a "grand plan" to remain competitive in the short-term insurance market, increase efficiencies and cut costs, said Entwisle.
Addressing the possibility of Mutual and Federal being sold by its parent group, Entwisle said the deal had been structured in such a way that it would not be affected by such a move.
Rose Keanly, MD of services, technology and administration at Old Mutual SA, said the transitioning to T-Systems would be completed by 1 May.
"It has been a rigorous evaluation process," she stated, adding that T-Systems local and international competences ensured that it fulfilled the requirements to secure the deal.
CSC had held the deal with the Old Mutual Group for eight-and-a-half years, and speculation is that some 90% of the company's local revenue was sourced from this contract.
CSC would not be drawn on the impact the loss of this contract is expected to have on the company.
However, Martin Vergunst, CSC SA managing director, said: "CSC SA has enjoyed a successful relationship with Old Mutual for the past eight years and will continue to deliver services for Old Mutual's managed network services. We will work cooperatively and professionally with T-Systems to transfer our Old Mutual services obligations.
"CSC remains fully committed to continuing to deliver services and meet all our current commitments to our other clients in SA."
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