Nearshore Americas

Datacom’s Victory Over IBM Illustrates Growing Popularity of Outcome-Based Pricing Models

New Zealand-based Datacom has signed a major outcome-based  ICT services contract with the Australian government, having seen off strong competition from IBM and Accenture.

The Kiwi firm will supply ICT infrastructure and support services to Australia’s Federal Department of Health upon the expiration of the existing contract with IBM and Accenture, which has been worth more than US$200 million over the past 16 years.

Analysts say the Datacom contract differs from the one IBM handled in that the government will pay the provider based on the outcome of its work, with the volume of consumption determining the pricing.

This is an indication as to how the nature of technology services deals are changing with the adoption of cloud computing. These days, analysts say, companies want to pay only for what they use instead of also paying for what they might use.

“This approach empowers Datacom to determine the best way to deliver the services, offering autonomy but also responsibility for the achievement of the outcomes,” stated Datacom in a press release.

For more than a decade, IBM Australia and Accenture have provided infrastructure and support for Australia’s federal health agency’s enterprise data warehouse, but their contract expires on June 30, 2015. It is bigger setback for Accenture than for IBM, because the former company built the enterprise data warehouse (EDW) for the agency in 2012.

Jonathan Ladd, Datacom Group’s CEO said : “We are delighted to have been awarded this work after going through a fiercely competitive process and an extensive follow up to ensure a support model that met the needs of the Department of Health.”

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Datacom already delivers IT services to other federal government departments including the Australian Customs and Border Protection, the Australian Taxation Office, the ACCC and Airservices Australia, CrimTrac and the Department of the Environment.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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