Tech Giant Direct Line Group Secures Massive IT Agreement with Capgemini
In a setback for Tesco, the migration of its systems from Royal Bank of Scotland's (RBS) infrastructure has been delayed, postponing the launch of its own mortgage products. This delay is estimated to have cost the company £40 million in lost profits.
Tesco Bank, a division that Tesco bought out from RBS, was aiming to launch its mortgage products, but the technical issues during the migration process have forced a delay. This is not the first time Tesco has faced difficulties during a migration. In 2011, technical issues during its migration from RBS's IT infrastructure prevented many customers from accessing their online accounts.
Meanwhile, Direct Line Group, an insurance company that separated from RBS last year, has selected Capgemini to design, build, and manage its new IT infrastructure. The five-year outsourcing agreement for the construction and maintenance of Direct Line Group's new IT infrastructure is valued at £100 million. Capgemini will be migrating a new infrastructure based on a combination of IBM mainframe, Wintel, and Unix systems for Direct Line Group.
The cost of migrating Direct Line Group's systems from RBS's infrastructure alone is £100 million, suggesting that the total contract value between Capgemini and Direct Line Group is many hundreds of millions of pounds. Direct Line Group, formerly known as RBS Insurance, changed its name last year and floated on the London stock exchange.
Capgemini will also offer cloud-based services for development, testing, and future projects for Direct Line Group. The company has deployed new applications post-RBS, including a new human resources system using cloud-based HR application Workday. This is Capgemini's largest infrastructure outsourcing deal since 2011.
The migration issues experienced by Tesco serve as a cautionary example for Direct Line Group and Capgemini. Tesco, a retail giant, bought out RBS's share in Tesco Bank in 2008 and decided to move to new IT infrastructure. The delay in Tesco's migration is a reminder of the complexities and potential risks involved in such transitions.
In a separate development, Direct Line Group has announced a five-year deal with Capgemini, making it the insurance company's technology partner. The deal is valued at £100 million, making it one of Capgemini's largest infrastructure outsourcing deals in recent years. With this partnership, Direct Line Group aims to modernise its IT systems and improve its digital capabilities.
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