Westpac has halved the term of its latest services deal with computing giant IBM, introducing more flexibility into the contract and demanding a slew of new service level agreements.In 2000, the bank signed a ten-year $2.3 billion services deal with IBM. Next week it begins a much shorter five-year deal.Westpac chief information officer Bob McKinnon said that although 10-year IT outsourcing contracts were common a decade ago, shorter, more flexible arrangements were now preferred. Westpac's latest agreement with IBM lasts just five years, with two one-year options to extend. This was long enough to justify both parties' investment, but short enough to avoid vendor lock-in, he said.The full value of the deal won't be known until 2015, because it has been structured as a unit price x quantity arrangement - the more services Westpac needs, the more it pays - and that demand will be influenced by its progress on its $2 billion five-year Strategic Investment Priorities (SIPs) program.Despite an AFR report yesterday which valued the deal at $1.3 billion, McKinnon said there was no headline number associated with the contract, and that the flexibility and granularity of the arrangement meant the total value would not be known until it was concluded.What is known is that IBM will be on a much tighter leash as all the service-level agreements associated with the contract have been renegotiated, with Westpac imposing higher expectations and additional SLAs and monitoring, according to McKinnon.He said the new IBM deal signalled a "very different relationship and sets us up for the future - aligning our companies to a shared vision, strategy and values." Asked whether this meant the last contract hadn't featured a shared vision and strategy, McKinnon said the alignment between the companies had eroded before being whipped back into line on his arrival at the bank. Three years ago, the relationship between the organisations was distinctly rocky, as Westpac battled high levels of technology black-outs. Since joining the bank, in 2008, McKinnon has worked closely with IBM to improve performance. In October he gave clear signals that the computer giant had redeemed itself sufficiently to be in the box seat for the renewal of the IT services deal.IBM will operate Westpac's key infrastructure services, including services related to the bank's new data centre, mainframe, mid-range computing, storage, desktop, print and security operations. Westpac will also retain a say in where skills to staff various projects are sourced. Peter Campbell, general manager for IBM Global Technology Services in Australia and New Zealand, said there would be "no material change" in terms of employment associated with the Westpac contract. Westpac would, in any case, have to approve any significant change in the skills mix, or the use of substantially more offshore workers.