Contact Cuts IBM From Enterprise System Replacement
February 11th, 2009
Contact Energy’s $80m enterprise system replacement project appears to be in disarray after the company recently jettisoned IBM as manager for the project to rebuild all aspects of Contact’s IT capability on a common SAP platform. Contact is understood to be deeply unhappy, having shelled out up to $20m on the “business transformation” project so far without progressing much beyond scoping.
The official line at Contact is there was never a contract signed with IBM, so there was no agreement to be officially terminated. Contact is now “going back out to the market” for a project implementation partner and remains committed to using SAP. In the meantime, Contact’s Australian majority owner, Origin Energy, is taking an increasing interest in the project and may create further delay if its own intended enterprise system upgrade can be coordinated with Contact’s.
If this happens, further pressure to locate core function capabilities across the Tasman may also be expected. On this note, Contact’s long-serving CFO, Kim Josling, is to move to Sydney for Origin, the company announced last week. Contact’s treasury functions shifted to Aust shortly after Origin became majority shareholder.
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