ASG picks up $35m CIMIC IT services deal


news Perth-headquartered IT services group ASG this week revealed it had picked up a deal worth at least $35 million over five years with CIMIC Group — the massive construction and contracting group previously known as Leighton Holdings.

In a statement released this week, ASG said the initial value of the contract was more than $35 million over five years, excluding projects and service extension oiptions. ASG will be providing both application and infrastructure managed services, supporting CIMIC’s “business-critical” JD EDwards enterprise resource management and business intelligence suites.

According to ASG, the company will be undertaking a transformation exercise to migrate CIMIC to a next-generation ‘as a service’ model. The contract will involve the transfer of a number of key personnel and assets from CIMIC to ASG.

ASG said the contract further reinforced its position as a key provider in the enterprise-level application space, building on a number of other contracts, as well as placing the company in a strong position as a leading Oracle business intelligence partner.

“This engagement is significant for ASG, given it was highly competitive against a number of tier 1 low-cost offshore providers,” said ASG chief executive Geoff Lewis in the statement. “The ability to ASG to demonstrate an understanding of the business issues and imperatives faced by our clients and formulate appropriate business outcome solutions, as opposed to simply providing resource arbitrage, combined with our reputation, pricing model and transformation experience are proving to be the winning combination to secure these large deals.”

Lewis further stated, “We are seeing a fundamental change in the conversations clients are demanding. Increasingly these conversations are about business efficiency and effectiveness, and being problem solvers rather than being the cheapest technology provider. This shift will be hard for many organisations to make as it will require a complete change to their DNA.”

ASG said this contract contributed to an $80 million contract pipeline previously identified, but that the company is also currently in exclusive negotiations for opportunities in excess of $90 million.

Looks like things are certainly trending upwards for ASG. if you look at the company’s share price over the past five years, it hit a lot of 28c in June 2013, but has since trended upwards gradually to the point where it has hit a high of $1 — a position it hasn’t been in for the past four years. The company’s share price also went steeply upwards after this contract win with CIMIC, which ASG considered important enough to have gone into a trading halt for.

Image credit (graph): Screenshot of Google Finance