IBM takes over Telstra's IT systems

"We have signed a contract with IBM to bring together the operations and management of all of Telstra's internal IT systems," Telstra said in an e-mail to staff seen by ZDNet Australia. The deal is reportedly worth AU$1 billion over six years.

The e-mail, in the name of Telstra's deputy chief information officer Vish Padmanabhan and managing director technology, network services, Michael Lawrey, said the move was part of Telstra's attempt to consolidate and simplify the way it operated as part of its "one factory" approach.

The e-mail noted the contract would cover work currently carried out by several groups, including IBM, Telstra's services arm and its internal IT services group.

A spokesperson for IBM confirmed the details of the contract but declined to comment on its monetary value.

"IBM has signed a contract extension to manage all of Telstra's mainframe operations with extended operations for midrange systems until July 2012," the spokesperson said.

"The agreement aims to bring the entire data centre operations of Telstra together under a single operating model. It also reinforces IBM's position as a strategic partner to Telstra."

IBM's existing, much smaller contract with Telstra for "selected operations services" was due to expire in July 2007.

Expected benefits
Telstra told staff the IBM deal would deliver business benefits including economies of scale and cost savings worth "hundreds of millions of dollars."

IBM will take responsibility for an additional 1500 servers under the contract, and implement what Telstra dubbed a "utility management toolset" to improve its monitoring and use of server and storage infrastructure.

Telstra said the deal would also deliver "a continued focus on improved service through the adoption of a global service management framework, in line with industry standards."

"Our extended partnership with IBM will allow us to free up our internal resources to focus on our core business," the telco said. "It is also an example of how we are directing our priorities and our resources to realise our vision to deliver a 'one click, one touch, one button' environment for customers."

Telstra said it had seen IBM deliver to "the highest standards" over past years, and the services giant had a "proven track record."