Gary Cohen, CEO of iSoft, shines a light (below) on iSoft’s negotiations with CSC in December 2009.
CSC has contracts worth about £3bn with NHS Connecting for Health and the Department of Health to deliver systems to the NHS as part of the NHS IT scheme, NPfIT.
CSC’s main subcontractor is iSoft whose delayed NPfIT Lorenzo electronic patient record system is due to be installed at NHS trusts across England, outside of the London area and the south.
In December 2009, iSoft re-negotiated its contract with CSC.
Now Gary Cohen, CEO of iSoft, says that the re-negotiation meant forfeiting some “short-term” turnover but his company has kept the intellectual property rights to Lorenzo and it has won the “ability to win business in our own right”.
This means that iSoft can sell Lorenzo to NHS trusts in the south of England – even if it’s in competition with CSC.
This is what Gary Cohen said when talking about iSoft’s first-half results:
“We renegotiated our UK NPfIT agreement with CSC in December. In returnfor lower short-term margins, the new agreement provides us with fargreater upside potential in the long run.
“This re-negotiation of therates for our services as well as other costs and new sharing elementsprovides us with greater visibility for the next 18 months in terms ofthe services we’re providing.
“However, the revenue and the margins willbe lower than last year, and lower than our original forecast.
“The newCSC contract will provide around A$90 million per annum compared withjust under A$106 million under the old contract in constant currencyterms.
“As we retain the same number of people and the same overallcosts, the lower revenue has a direct margin impact.
“We agreed to thesechanges because, first, we felt that it was important to have anagreement in place with CSC that allowed us to enter the NHS contractnegotiations together as a team.
“Secondly, we were not willing to giveup our rights in relation to the retention of our intellectual propertyin our Lorenzo solution in exchange for limited short-trmrevenue.
“Although we gave up the opportunity to earn some additionalrevenue in the short term, the new contract provides increasedflexibility, and gives us the ability to win business in our own right…”
iSoft CEO Gary Cohen discusses first-half results – TMCnet.com
Secret report on Lorenzo – hundreds of issues? – IT Projects Blog, 2008
NPfIT Lorenzo – £57,000 per user so far – IT Projects Blog
iSoft announces Lorenzo for the iphone – ehealthnews.eu
iSoft half year results – abnnewswire
iSoft profits down – Topix