The sale of NHS software supplier iSoft will go ahead following the resolution of a dispute with key customer Computer Sciences Corporation (CSC).

CSC, which oversees 60 per cent of the £12bn National Programme for NHS IT (NPfIT), blocked the sale of iSoft to Australian software supplier IBA Health last month because of concerns about delivery of key software for the NPfIT.

It has a step-in clause that allows it to take over the development of the Lorenzo hospital administration software and used its power to block the proposed merger.

But the two companies have agreed on changes to the terms of their contract for the programme and iSoft says it has dropped legal proceedings against CSC.

Under the changes, iSoft will keep intellectual property rights to the Lorenzo software and accept a five per cent reduction in licence revenue. CSC will also take greater management control for the delivery of the NHS programme.

‘iSoft and CSC have been in discussions regarding the development of certain aspects of Lorenzo,’ iSoft said in a statement. ‘The objective has been to improve efficiency of the overall delivery process, maintain ownership of the development expertise and Lorenzo intellectual property and give increased certainty as to the payments that iSoft can receive from NPfIT.’

While iSoft will retain intellectual property, it will merge its NPfIT development team with CSC under its leadership, says Ovum analyst Phil Codling.

‘This ends an unfortunate and all too public spat between two key suppliers to NPfIT,’ he said.

‘Only time will tell whether CSC’s increased control of software development can speed up the delivery of Lorenzo and other key components. Certainly its pockets are deeper and its long-term future more secure than iSoft’s.

The deal ring fences iSoft’s NSH work under the control of CSC while allowing the IBA acquisition to go ahead, says Codling, which is the best possible outcome.