• silicon.com
• Management
• CIO Insights

By Andy McCue, 17 June 2005 12:55

NEWS CSC has beaten off stiff competition from rivals to extend an IT outsourcing deal with Anglian Water worth £34m over five years.

But the value of the new deal represents a significant annual discount for Anglian Water on the £200m 10-year outsourcing contract originally signed with CSC back in 1995.

That contract was put out to competition early last year when Anglian Water told silicon.com it would not enter such a long-term deal again. "Ten years was far too long," a spokeswoman for Anglian Water told us at the time.

The new contract will cover the provision of information and communication technology services for around 80 sites and 3,500 users spread across East Anglia and the northeast, including the enhancement of a major SAP implementation, customer billing and geographical information systems.

Peter Simpson, COO at Anglian Water, said in a statement: "The selection process was lengthy and rigorous and CSC has beaten strong competition from other leading IT suppliers. CSC put together a strong solution which was extremely competitive and addressed Anglian Water's need to raise its game in key areas such as the innovative exploitation of IT."

Phil Codling, analyst at Ovum Holway, said in a briefing note that keeping hold, or "recycling", of existing customers is vital for services companies. But he also noted that the annual contract value has been "squeezed downwards" by more than half - from £20m per year to around £7m per year.

"In today's market, where brand new revenue opportunities are hard to come by, hanging onto your existing customers is both harder and more vital than ever before," he said.