ATO to upgrade its IBM mainframe again in quiet $104.8m deal

The Australian Taxation Office is set to upgrade to IBM’s z17 mainframe under a $104.8 million expansion of an existing mainframe modernisation program it signed back in 2023.

iTnews can reveal the modernisation program, which previously saw the tax office move off an end-of-life z14 mainframe to a z16, was quietly extended just before Christmas, with the change coming into effect a week later on January 1.

The amendment is material: taking what was an $87.7 million contract and more than doubling its value to $192.5 million.

It adds three years to the mainframe modernisation program, but perhaps more importantly, it puts the tax office on an upgrade path to IBM’s year-old z17, which is marketed for its superior processor, memory capacity and power efficiency, as well its ability to handle AI workloads.

“The IBM amendment exercises available extension options to extend the contract for three years and increases the value by $104.8m to a total value of $192.5m,” an ATO spokesperson told iTnews.

“This contract includes further modernisation of the mainframe platform including the provision of z17 mainframe hardware and related software which increases value to the organisation and our services.”

The ATO’s spokesperson also said that a portion of the $104.8 million would fund “the implementation of the Payday Super policy” on the ATO’s IT infrastructure and systems.

Under this policy, employers must align the payment of superannuation with their payroll cycles. This change comes into effect from the start of July.

The ATO has previously outlined some of the system changes on its end that will be required to meet the new superannuation payment obligations.

iTnews previously confirmed that the ATO had completed its upgrade from IBM z14 to z16 mainframe hardware and software as scheduled in 2024.

The extended deal with IBM, covering the upgrade path to the z17, means the modernisation program now stretches into mid-2031.