Updated: Analysts relieved as NHS contractor CSC and iSoft sit down to talks

NHS contractor CSC will take control of troubled software supplier iSoft’s work on the health service’s £12.4bn National Programme for IT (NPfIT) – but will also allow the firm to be sold, analysts have predicted.


Analysts have predicted that NHS contractor CSC will take control of troubled software supplier iSoft’s work on the health service’s £12.4bn National Programme for IT (NPfIT) – but will also allow the firm to be sold.

Yesterday, CSC and iSoft began talks over “commercial arrangements” to allow the IT services giant – which is lead contractor for NPfIT in three out five regions – a greater role in managing the delivery of iSoft’s Lorenzo care record system, which is a crucial element in the NHS IT overhaul but is running two years late.

The talks follow escalating tension between the two firms that saw iSoft initiate a lawsuit earlier this week after CSC blocked its planned £140m sale to Australian software firm IBA.

But iSoft confirmed that both companies had “agreed temporarily not to take further steps in court” while the talks continue.

Ovum analyst Tola Sargeant said: “It's a relief to see CSC and iSoft talking again since the outcome has such significant implications for NHS IT.”

She added: “But iSoft only has funds to last it until November and uncertainty over its future is a real worry for its customers across the NHS.”

The best outcome for the NHS would be “a deal that ringfences iSoft's NHS work under the control of CSC whilst allowing the IBA acquisition (or another similar deal) to go ahead”, Sargeant suggested. “This is also the most likely outcome in our opinion.”

Under an agreement between the two companies signed last year after iSoft reported a series of financial losses, CSC has the right to step in and manage Lorenzo and must give its consent to any sale of the software firm.

The IT services giant withheld its consent to the IBA deal because it felt this would not support successful delivery of the Lorenzo system. Instead it moved to increase the number of CSC staff – currently around 100 – working inside iSoft.

CSC had also considered acquiring the troubled software firm itself, possibly with the backing of US private equity fund Gores, and has also investigated purchasing iSoft’s debt.

But Sargeant said; “Acquiring the failing software company has to be the last resort.”

While the talks between the two firms go on, iSoft “continues to seek CSC’s consent” for the sale to IBA, the software firm said.

NHS Connecting for Health, which runs NPfIT, denied reports that its director general Richard Granger intervened in the brewing row between CSC and iSoft. A spokesperson said: “There isn't an involvement. We hope the three parties – CSC iSoft and IBA resolve matters between themselves.”

He added: “Our role is only in the public interest to ensure delivery of Lorenzo for the NHS. We are watching the situation but we are not involved.”

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