Sainsbury's calls time on IT outsourcing contract

Sainsbury’s is to terminate its IT transformation outsourcing contract with Accenture and bring its IT in-house.

The company initially signed a £1.7bn seven-year deal with Accenture in 2000, before renogiating terms in 2003 and extending the contract until 2010. 

Accenture will migrate some of its staff and the IT services it provides back to Sainsbury's.

Sainsbury's chief executive Justin King said in a statement: ‘Five years ago, Sainsbury's IT systems were suffering from severe lack of investment and development. 

 'Accenture has provided our business with system reliability and stability which we would not have been able to provide ourselves. We believe the time is now right to develop further our IT capability in-house.’

 An Accenture spokesman told Computing: ‘Sainsbury's has exercised its right to terminate its contract.

 ‘But Accenture has delivered on the IT transformation project and we are pleased the company now has the confidence to continue on its own.’

Douglas Hayward, senior analyst at researcher Ovum said: ‘The connection between the IT infrastructure and the customer-facing business was poorly managed – both sides share the blame here.’

Doubts were cast on the capability of its IT to support the business last year when problems with supply chain IT systems were cited as the reason behind  disappointing financial performance and the cause of £500m in related supply chain and IT assets.

‘The IT cost is a greater proportion of sales than they were three years ago,’ said King at the time. (Computing, 19 Oct 2005).

And the company has been re-building its in-house IT team in the meantime.

Hayward added: ‘I also think that early on, Accenture's fearsome sales and marketing machine over-played its role in the business (as opposed to technology) transformation, making it a convenient scapegoat when the revenue and profit growth didn't arrive.’

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