The $64 million answer from EDS
The $64 million answer from EDS
An independent economic impact study, conducted by the South Australian Centre for Economic Studies, has found that at least $64 million in savings has been achieved during the first six years of the IT partnership between IT services company EDS and the South Australian Government.
The study states the significant savings appear to be over and above those originally envisaged in the nine-year outsourcing agreement. The study also found that the presence of EDS in Adelaide has directly contributed to the growth of the South Australian economy, with the company’s workforce now exceeding 2,000.
Prepared for EDS by the Centre director, Michael O’Neil, together with research economist, Ben Dolman, the report said EDS had replaced a piecemeal IT system with an integrated, standardised Government-wide network.
The report also stated it was unlikely the Government would have consolidated its IT infrastructure to the extent achieved by EDS, and therefore savings would have been limited.
"The report provides clear evidence of the benefit derived by the State Government from the outsourcing deal," according to Bruce Linn, executive director of the EDS South Australian Government account. "It shows the actual costs incurred by the Government until September 2002 are at least $64 million less than at the beginning of the agreement in April 1996.
“Between $13 million and $20 million of these savings can be directly attributable to EDS, once contract management costs and other external factors have been removed.”
The centre said it was significant that the savings only related to two parts of the contract - the mainframe and wide area network (WAN).
Because of the changes in technology and the Government’s requirements, the centre found it difficult to quantify the extent of savings for the remaining IT segments – local area network (LAN), midrange and workstations. However, the centre found that significant price reductions had been achieved across all three segments. This result had been achieved while introducing new technology and responding to thousands of new service requests.
"The quality of the service provided by EDS appears to be generally high," the report said.
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