Aussie Home Loans ditches Telstra’s Kaz

Controversial Telstra technology services division Kaz Group has suffered a blow after Aussie Home Loans ended its five-year computer outsourcing relationship with the business in favour of a deal with New Zealand rival Datacom.

Mortgage specialist Aussie Home Loans has ditched its incumbent IT outsourcer, Telstra subsidiary Kaz, in favour of a new three-year, AU$7.8 million arrangement with New Zealand-based Datacom.

Datacom said in a statement this morning that following a competitive tender process, Aussie would outsource all of its IT operations to Datacom, including database and server administration and support, network management, datacentre hosting and desktop support. The deal is understood to be worth approximately AU$2.6 million a year.

The work had previously been provided by Kaz since at least 2003, when Aussie outsourced most of its IT operations. Software development is believed to be done by Simbient. Datacom will provide services not only to Aussie’s 700 staff but also the group’s mortgage advisors and franchise holders.

The deal between Aussie Home Loans and Datacom was sealed in March, however, the mortgage provider has held back from announcing the arrangement until it completed moving its datacentre to Datacom, which occurred in early July.

“We awarded them the contract because of their clear and extensive technical capability, the openness and transparency of their contract process and they had a real passion for our business, which is broking, not IT,” said Aussie Home Loans chief information officer James O’Donnell.

Mark McWilliams, the managing director of Datacom’s NSW division, said his firm offered Aussie something different.

“We give the customer complete openness and transparency of pricing — a full flexibility commitment which allows them to change all or part of the contract with 90 days notice,” he said. The executive added Datacom had made a commitment to improve its service to a cost ratio of five per cent each year.

O’Donnell told that Datacom won the business because of its “open book pricing”, which allowed Aussie to cut out costs in line with falls in Datacom’s cost of providing services.

“This means that as I make efficiency gains, which drives down Datacom’s costs to serve me, I can capture that value out of the contract,” he said.

None of the other tenderers in the shortlist of four candidates, which included Kaz, offered a similar package, said O’Donnell.

The service desk component of the contract was also crucial, he said. “All my due diligence said that [the service desk] was one of their strengths, as well as the quality of people, who have impressed me since we have moved across.”

O’Donnell said Aussie has no complaints about Kaz’s service, however, he only joined the loan company at the end of its contract with Kaz.

“I would compliment Kaz on their professional exit from involvement with Aussie — that transition period is always a concern,” he said.

O’Donnell joined Aussie Home Loans in April 2007 from his role at Brambles Industries as its vice president of technology, following Christopher Hatzidis’s brief stint as Aussie’s CIO.

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