EDS wins $1 billion deal with Aviva

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EDS has won a $1 billion (£700 million) contract with UK-based insurer Aviva to provide data centres over the next ten years.

HP-owned EDS will upgrade and run two Norwich-based data centres for Aviva, the world’s fifth largest insurer, previously known as Norwich Union.

Under the deal, EDS will modernise the data centres and manage mainframe and Windows-based servers, using HP and Cisco tech. EDS will also take on 300 Aviva employees.

“Partnering with EDS for data centre services, in our view, supports Aviva's goals to improve flexibility, increase operational efficiency and lower costs,” said Igal Mayer, UK general insurance chief executive officer at Aviva, in a statement.

One analyst said the deal is proof that mega-deals still exist in the IT market. Ian Brown, senior analyst for Ovum, said the deal is one of the biggest in UK IT outsourcing history.

He said Aviva’s back-office systems “probably aren’t in that bad a shape” but added the firm is clearly looking for more efficiency, hence the outsourcing deal. He expects the data centre modernisation will centre on standardisation, rationalisation and automation.

“Programmes like this are where the $1 billion deals are to be found, not in the ‘sexier’ areas of IT,” he added. “These are things that CIOs could undertake in-house, but maybe not at the same cost: £700 million sounds like a lot, but £70 million a year to sort out and manage two big data centres and 300 people looks like a bargain for a company with annual revenues of £50 billion.”

Indeed, Brown said Aviva likely won a better price by opting for a longer term deal. “There’s evidence here and abroad that the recession will encourage vendors to return to pitching longer terms in return for more competitive pricing.”

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