Aviva signs EDS £700m outsourcing deal

UK-based Aviva, the world's fifth largest insurer, has signed a 10-year, £700m outsourcing deal with EDS.

UK-based Aviva, the world's fifth largest insurer, has signed a 10-year, £700m outsourcing deal with EDS. It aims to save 20% a year in IT costs and move to a largely pay as you go IT operation.

Malcolm Simpkin, Aviva's UK IT services director, said the deal means Aviva will transfer the assets, development and operational staff of two datacentres in Norwich to EDS.

EDS will then optimise them and introduce new technologies such as virtualisation. EDS will provide Aviva with a cost structure allowing the insurer to match IT costs with the volume of business it does.

The deal allowed Aviva, which turns over £40bn a year, to convert more of its IT budget into variable cost, Simpkin said. Even though the new cost structure is stepped to reflect transaction volumes, Aviva expected to do away with large capital investments. This was highly desirable while the finance markets as volatile as they are at present, he said.

Aviva also expected to benefit from improved productivity that EDS can extract from the hardware by running other firms' work on it, he said.

"The total benefit to Aviva is about 20% of the IT budget per year, and we reduce the complexity of running the business," said Simpkin.

Simpkin said Aviva chose EDS after an 18-month datacentre strategy process saw a long list of five potential suppliers whittled down to two before the deal was signed last month.

The datacentres in Norwich serve Aviva's businesses in the UK, India, France and Ireland. HP and Cisco will provide select tools, technologies and resources to EDS to support Aviva's business.

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