IBM’s $1 billion Federal Govt win

Published on the 13/07/2018 | Written by Heather Wright

IBM_Govt tech projects

Cos no one gets fired for choosing IBM, right?...

IBM has inked a $1 billion deal with Australian Federal Government which will see it providing services across the entire government – despite its failures in the 2016 Census which resulted in a confidential settlement by IBM to cover costs of the failure.

The new five-year whole of government deal – the largest ever signed by the Australian federal government – will see IBM providing hardware, software and cloud-based solutions.

The deal will also see joint innovation programs between IBM and the Australian Digital Transformation Agency, covering off the latest hot topics such as quantum, AI and blockchain in an effort to propel Australia forward in its goal to being one of the top three digital governments globally, come 2025.

“The savings amount to a 10 percent discount over a $1 billion deal – with a five year lock-in.”

IBM’s R&D teams in Australia are engaging a Melbourne research team ‘to accelerate the application of blockchain, AI and quantum computing in government’ while separate units of developers will work on cybersecurity solutions for data protection and supercomputing for government services.

Microsoft and SAP already have whole of government agreements in place.

IBM hailed its deal – the first of its kind between IBM and a national government – as a big win, enabling it to provide its services to all government agencies while providing tax payers with ‘significant’ cost savings.

Michael Keenan, Minister Assisting the Prime Minister for Digital Transformation, says the deal will deliver ‘more than $100 million in savings and benefits for taxpayers over the next five years’. To put that in perspective, that’s effectively a 10 percent discount over a $1 billion deal with a five year lock-in.

The Government’s digital transformation office has been under scrutiny recently for a “litany of failures“.

“As a major buyer of IBM’s products and services, the deal enables us to maximise the return on our ICT investments and ensures that taxpayers are always getting the best possible value for money,” Keenan says.

The deal also applies to more than $300 million worth of existing contracts with IBM.

IBM already partners with the Department of Human Services, Australian Taxation Office, Department of Home Affairs and the Department of Defence.

It’s less than two years since PM Malcolm Turnbull was slamming IBM for its handling of the census website failure debacle, which saw the site offline for nearly 48 hours after a denial of service attack.

IBM hosted and managed the Census website in a $10 million deal.

At the time, Turnbull said the tech company should have been better prepared for the ‘completely predictable’ denial of service attacks.

IBM ultimately paid a ‘very substantial’ settlement to cover the cost of the failure, which the Australian Bureau of Statistics had said would cost taxpayers about $30 million.

That decision to bite the bullet and pay up quickly may well have helped reap billion-dollar returns for the company.

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