Exclusive: AA terminates £50m IBM deal

The AA has terminated its £50m seven-year IT outsourcing deal with IBM three-and-a-half years early, as a result of its £6.2bn merger with Saga, and will bring the infrastructure back in-house.

The AA's IT director Trevor Didcock has also left the company as part of a top-level managerial shake-up and the newly merged group has already started the process of bringing its data centres and infrastructure back in-house from IBM, which will take place over the next year.

A Saga spokeswoman confirmed the role will now be at group level across both companies and will be held by Saga's current IT director, Jim Cameron.

The merger was given the formal green light from European competition regulators earlier this month. Saga will have managerial control of the newly merged organisation and favours keeping operations in-house rather than outsourcing.

In an exclusive interview with silicon.com just before he left the AA, Didcock said: "We have terminated our deal with IBM. The intent is to move that work in-house. We are recommissioning our data centre here in this building and we'll put a second data centre into either the Saga sites or local to here. And we'll steadily move the services back in-house,"

The AA signed the £50m IBM deal back in 2005 after the breakdown organisation separated from Centrica following a private equity buyout. As part of that deal the AA had just 12 months to build an entire new IT department and infrastructure.

Didcock maintained the termination has been amicable and that IBM have been "fantastic and really supportive".

He said: "IBM is going to end up with a three-and-a-half year deal instead of the planned seven years. But they've been really professional. They know these things happen as a consequence of mergers."

IBM decline to comment.

The AA's other IT and telecoms deals are also up for grabs as part of the Saga merger. As Saga already has a networking deal with Cable & Wireless (C&W) the likelihood is that will be merged into the AA's existing £10m contract with C&W, though Didcock said no decision has yet been made on that or the company's application support contract with Fujitsu Services.

Data warehousing will also be a big strategic decision - the AA is currently an SAS user while Saga has a mix of suppliers.

Didcock added: "Most of the management has been provided by Saga so it's highly likely... the Saga guys will run the business going forwards."

Read the full interview with Didcock here.