IBM has signed a one-billion-dollar five-year agreement with the Australian government to provide IT hardware, software and services for all government agencies across the entire country.
The deal also allows smaller enterprises to channel-partner with IBM to supply ancillary services. Under previous arrangements, national agencies negotiated individually with suppliers, resulting in price disparities across departments.
The partnership, which is the highest valued IT contract ever signed by the Australian government, and IBM’s first ever whole-of-government agreement, locks in an estimated AU$100 million in savings for agencies such as the Department of Human Services, Department of Home Affairs, Department of Defence and the Australian Taxation Office.
IBM technology will enable these agencies to rapidly improve their self-service, digitization and automation capabilities.
IBM has been a key supplier to the Australian government for 40 years, and benefits from the deal will flow through to over AU$300 million in existing contracts.
Under the arrangement, Australia’s Digital Transformation Agency will also run a joint innovation program with IBM’s Melbourne-based research and development team. The partners will assess how the introduction of technologies like blockchain, quantum computing and AI can be prioritized to help Australia achieve its goal of becoming one of the world’s top-three digital governments by 2025.
Big Blue will also help departments harden their systems to protect against cyber-security threats.
“The Whole-of-Government agreement reflects the growing importance of technology to the government’s transformation agenda,” said IBM’s ANZ Managing Director, David La Rose.
“It shows trust and belief in our ability to transform and provide world-leading capabilities, leveraging our investments locally in AI, blockchain, quantum and cloud,” added La Rose.
“As a major buyer of IBM’s products and services, the deal enables the government to maximize the return on its ICT investments and ensures that taxpayers are always getting the best possible value for money,” said Minister Assisting the Prime Minister for Digital Transformation, Michael Keenan.
The deal follows previous Australian whole-of-government agreements with SAP and Microsoft, which Keenan says have saved taxpayers AU$1.2 billion over ten years.
It comes at a critical time for IBM, after the company’s widely criticized mismanagement of the Australian Census program in 2016. IBM reportedly paid more than AU$30 million in compensation for its role in the botched national survey, which was hit repeatedly by Denial of Service attacks.
Big Blue has suffered declining revenues in recent years, with the company’s shares falling by 25% over the past half decade, significantly underperforming the technology sector.
Legendary investor Warren Buffett also recently wrote off the technology giant, revealing in May that Berkshire Hatthaway had sold its huge stake in IBM, opting instead to buy a further 74 million Apple shares.
But despite these setbacks, the time may have come for IBM to rise from the ashes once again. The company has pulled off many recoveries throughout its 107-year existence, and it looks like the US$71 billion that it has poured into innovative technologies over recent years is may start to pay dividends.
Major wins such as the Australian Government announcement, the recent US$500 million, 10-year cloud computing deal with major Italian bank Banca Carige, and a US$320 million agreement with Denmark’s largest IT company KMD, certainly sounds like the right path to recovery.