IBM has announced a seven-year deal that extends a supply-chain outsourcing arrangement struck in September 2006, and is expected to deliver Telstra cost savings of as much as A$700m according to Ovum.

IBM is taking over end-to-end responsibility for the operation of Telstra's supply chain for telecommunications parts and common business consumables such as office products, utility services such as electricity, gas and water and industrial supplies. The core elements of IBM's systems platform comprise SAP, Maximo for asset management, Windchill for product data/lifecycle management and BusinessTone for visibility across the supply chain, with use of the Dynamic Inventory Optimization Solutions (DIOS) tools for logistics optimization analysis and reporting.

Cost savings are primarily driven by process simplification, system consolidation/replacement and headcount reductions, with around 125 positions expected to be made redundant in the transition during 2008.