Gen-i beats off big boy for insurer's $40m IT contract

By RICHARD WOOD

New Zealand company Gen-i has beaten multinational EDS to a $40 million IT contract with NRMA Insurance NZ.

NRMA is a subsidiary of Australia's largest general insurer, Insurance Australia Group. It operates the State and Circle insurance brands in New Zealand.

The five-year contract covers the ownership, management and development of NRMA's entire IT infrastructure, servicing 1250 desktops. There is an option to continue for a further two years and another two after that.

Gen-i will lead a group of suppliers that includes Datacraft, Rentworks, Telecom and IBM. The tender process originally involved seven vendors and began in January.

Catherine Rusby, NRMA's general manager of strategy and technology, said Gen-i was chosen because it put together a good team, its proposal reduced costs, was extremely flexible, and there was a good culture fit between the two companies.

Gen-i and Rentworks will buy all the IT assets of NRMA at book value, then lease them back. Seventeen staff will transfer to Gen-i, with some remaining on site at NRMA in the transition process.

The IT operation is round-the-clock and includes 90 infrastructure and application servers, a network of 1250 desktop computers, two Citrix server farms, a national ATM and frame-relay network, and two high-security data centres.

A core part of the plan is a project to rationalise the storage and server infrastructure, refresh hardware and software, and beef up security.

Control of systems architecture and IT strategy will remain at NRMA but Gen-i will have leeway to make its own technology choices.

Rusby said NRMA was moving away from the "controlling approach" to IT. For example, the firm had always measured detailed areas such as network availability.

"Now all we care about is the percentage of availability of the core applications at the desktop.

"We are going to let them worry about defining how much availability that means for their network and so on. They can define and design their own solutions to get the outcomes they want."

Gen-i chief executive Garth Biggs said it was not useful for a customer to know a router had been down for three hours, but a disabled application was another matter.

"This is a more logical way of a business looking at its risk."

The contract also avoids the typical penalty clauses, which have been replaced by a service credit system.

Rusby said if service level targets were not met one period then Gen-i could compensate by over-delivering in the next.

"Sometimes things happen. It gives me no joy to get financial remuneration if they screw up."

Biggs said the deal recognised the reality of IT and partnerships.

"If there is a problem it's 'Let's get on and get ahead', rather than get in a room and beat each other up."

Another part of the deal is an Innovation Council that will evaluate initiatives as possible profit- or benefit-sharing schemes.

Rusby said Gen-i would use its expertise in identifying and implementing new technology, while NRMA would see how it could apply that to business.

Gen-i's other customers include Air New Zealand, MAF and Ravensdown Fertiliser.

NRMA New Zealand will change its name to IAG New Zealand next month.