LogicaCMG signs $4m Woodside extension

Outsourcer LogicaCMG has signed a three-year, $4 million contract to keep providing application and IT services management and support to Woodside Energy in Western Australia.

Andrew Tindell, CEO at LogicaCMG Australia, said the deal is essentially an extension of an existing contract signed around two years ago and will be managed out of Perth.

'It shows the contract was keeping our customer happy. It's basically an extension of what we were doing already but there will be some adjustment to the scope of it that's not very significant,' Tindell said.

Greg Forbes, MD for energy and utilities in Asia at LogicaCMG, said the contract covered all the energy company's application, maintenance, support and development outside its SAP environment.

'So it encompasses third-party products and supply as well. We supply the system and personnel around the Java J2EE or .NET environment - but perhaps moving more towards J2EE,' he said.

Forbes said that, although Woodside had significant amounts of Microsoft in its IT infrastructure, the company was following the trend of moving more towards open source to save costs and maintain vendor independence.

'We need to rationalise some of [the infrastructure] because, given that different departments are doing different things, that can give them a bit of a cost benefit,' he said.

Forbes said Woodside was engaged in a 'profit improvement program' stipulating, among other things, a 30 percent cost reduction in the next 12 months.

'It's not about cost-cutting per se, but more about getting some models together to get a 30 percent of unit-cost down to build more profits,' Forbes said.

He added that, from an application support perspective, LogicaCMG managed to bring Woodside's costs down to that target over the last few years.

'I think the key thing is we're now focusing on trying to rationalise applications [for Woodside],' Forbes said. LogicaCMG's global financial results were also announced.

Tindell said that the company's Australian revenue had grown 'subtly' by about one percent in the last six months, largely through a focus on selective sourcing.

'We have grown the orders though ... by about 21 percent ... which is more important because to grow the revenue you need to [first] grow the orders,' he added.
Tindell said it had been a 'very hard' two years but LogicaCMG believed it had turned the corner. The profit margin had gone up by about seven percent, compared to five percent in the same period last year.

Outsourcing accounted for about half the company's revenue in Australia, he added.

LogicaCMG did not publish a country-by-country breakdown of its financial results, but the 'Rest of World' category had taken £61 million in the past year and Australia earned about 40 to 45 percent of that, Tindell said.