This has been done through a head agreement covering the 96 public service agencies, and then separate agreements with the big four agencies: the Australian Tax Office, Home Affairs (which includes Immigration), Defence and Services Australia. A separate agreement has been signed with the Digital Transformation Agency, on behalf of around 15 second-tier agencies.
Easy transfer of assets between agencies
Australian IBM managing director Nicholas Flood said the new agreement allowed agency chief information officers (CIOs) to easily transfer technology assets between agencies and reuse capabilities on highly competitive terms.
“As government agencies respond to emerging issues, they require agility and flexibility to adopt and scale up certain types of technology as needed,” Mr Flood said.
“IBM’s new arrangement helps to enable this, providing agencies with the flexibility to adopt technology at their own pace and adjust the types of technology they use to best suit their needs in the future.”
The new agreement limits forward pricing options not to exceed commercial pricing, as well as allowing for volumetric pricing.
The agreement also rolls out mainframe pricing based on average use, rather than the peaks and troughs, to all 96 agencies.
“This is the world’s first integrated model for mainframe technology that significantly improves flexibility and reduces costs associated with the platform,” Mr Flood told The Australian Financial Review.
He said this would especially help an agency like the ATO, which has strong peaks in July and September when personal and company tax returns are mostly submitted. Services Australia, which often also sees large server demands after weather-related emergencies, pioneered this facility.
IBM’s mainframe dominance
Mr Flood said IBM’s purchase of open-source infrastructure and cloud company Redhat in 2018 meant the new arrangements reflected the focus IBM had on enabling CIOs to place their applications on any cloud platform and avoid lock in.
IBM built its dominance in government through its mainframe computers, and as these age the new vendor agreement makes it far easier for CIOs to move their applications to the cloud or back to a mainframe environment. This will be highly advantageous to the big four agencies, which still rely on mainframes to manage their high-volume transactions.
DTA chief executive Chris Fechner said the agreement streamlined contracting to reduce the time, effort and resources required throughout the procurement process.
“It offers important continuity for the business systems that support critical government services which Australians rely on,” he said.
“Through the Commonwealth negotiating as one entity, the contract will continue to give government agencies better value for money and more flexibility when sourcing commonly used IBM products and services with a focus on essential government requirements.”
The 2018 agreement was for $1 billion but reportedly doubled as agencies took advantage of IBM’s enterprise technology and service offerings.
The new deal comes after IBM spun out its $18 billion outsourced services division in 2021 into a firm known as Kyndryl. This left IBM as a pure technology company and around 40 per cent smaller.
The agreement gives agencies access to IBM’s strong capabilities in artificial intelligence automation – through its Watson offering – quantum technologies, enterprise level cybersecurity and cloud data management.
Agencies will also be able to join funded pilots to trial and test sustainability software to track their various emissions. IBM acquired Australian sustainability firm Envisi last year to create a single source of truth for emissions reporting.
IBM has been working with quantum computing for decades and has the world’s largest fleet of quantum computers available through the cloud.
“The arrangement with the DTA will enable government agencies to work with IBM to explore how quantum technology could be appliedto some of their most challenging problems,” Mr Flood said.
The agreement comes as the chief scientist and quantum expert Cathy Foley finalises the next iteration of the government’s quantum strategy. Australia has some strong but limited quantum capabilities. The industry is highly fractured and industry support is spread thinly across a mish-mash of initiatives.
