Reseller News

Unisys NZ hits revenue low as clock ticks for closure of local datacentres

Plan to close Kapiti and Auckland datacentres by November 2022 poses a risk for IRD.
  • Rob O'Neill (New Zealand Reseller News)
  • 09 July, 2021 06:40

Unysis New Zealand reported its lowest revenues in at least two decades this week, $43 million for the year ended 31 December 2020, down from $60.3 million in 2019.

The result comes as a significant deadline looms for the closure of the company's long-serving Kapiti and Auckland datacentres. These house client systems including Inland Revenue's legacy tax software, now being replaced in a $1.8 billion transformation project, and some of ACC's systems.

Costs were also down across the board at Unisys in 2020, particularly royalties paid to related parties, which fell from $12.4 million to $4.9 million. 

Those cost savings kept the company in the black for the year as it reported a net profit after tax of $2.6 million, down from $5.8 million in 2019.

Revenue for the year was ahead of internal company expectations, Unisys NZ told Reseller News in a statement.

The year-over-year decline was in part due to the fact that 2019 revenue benefited from a large technology contract with ASB bank. This also benefited profitability, as technology costs were largely fixed.

"Additionally, COVID-19 had a minor impact to our field services revenue in New Zealand in 2020," the company said.

"We have a mix of steady-state revenue contracts combined with one off and project services scope that from time to time drives spikes in our revenue and margin profile."

Unisys was awarded four contracts by Inland Revenue over the four years to 30 June 2020, according to a departmental filing. The four contracts were worth a total of $32.5 million.

Unisys' plan to close its local datacentres was a risk for IRD, the department's deputy commissioner - transformation, Greg James, told the ministers of finance and revenue last November.

"The top three risks for transformation relate to the need to move off all our heritage applications by 1 July 2022, so that we can fully decommission our heritage datacentres," James reported. 

"Failing to exit the Unisys datacentres by the contracted date has financial consequences but, more importantly, Unisys is exiting this business, handing the facilities back to the owners, and removing all technology hardware. 

"The date that we have been given is a hard deadline with only limited leeway."

IRD said it had "strong mitigations" in place to move its legacy tax system and SAP financials and payroll out of the datacentre.

Unisys confirmed it planned to close and move out of its datacentre facilities in Auckland and Kapiti by November 2022.

"As new technologies evolve, so does our company," the company told Reseller News

"The successful growth and maturity of infrastructure and application hybrid cloud services, as well as higher density infrastructure technology, has created a significant shift in datacentre housing services requirements.

"This means that it is no longer a strategic intention, or viable, for Unisys to have its own datacentre facilities in New Zealand."

Unisys will, however, continue to provide managed datacentre services to house clients’ equipment securely in modern, resilient and environmentally conscious facilities through colocation agreements with specialist partner datacentre providers within and beyond New Zealand.

"This move aligns with Unisys global strategy to focus on, and invest in, delivering a full suite of cloud managed services and datacentre management capabilities to help New Zealand organisations reduce costs and gain efficiencies, flexibility and scalability."

In 2020, around 86 per cent of Unisys NZ's revenue was generated by delivering services, including digital transformation and agile development services for government, while only 11 per cent was from technology sales.

Highlights of 2020 included Unisys being accepted to provide cloud transition services based on Unisys CloudForte to New Zealand government agencies through the all of government Marketplace.

In addition, and reflecting strategic investments in its digital workplace services portfolio, IDC ranked Unisys as "major layer" across Asia Pacific, including New Zealand.

"We have also expanded reach in New Zealand via security channel partnerships including Foregenix and SeComPass," the company said.