Aircraft engine and car manufacturer Rolls-Royce is focusing on ebusiness as part of its mammoth £2.1bn outsourcing deal with EDS. The services giant will help Rolls-Royce develop a purchasing system, as well as indirect procurement and logistics systems.

In the pipeline is a collaborative design portal to allow engineers to work with business partners, and corporate portal to improve knowledge management. All projects are currently being piloted in the UK, but will be rolled out across Rolls-Royce's worldwide business.

As well as the simple outsourcing of systems the contract is designed to allow shared risks and rewards - for example, EDS will get a percentage of any savings it delivers.

"We don't think that the suppliers shouldn't make a profit - if they are making a profit, so are we," said Rolls-Royce industry programme manager Ron Warner.

The 12-year deal extends an existing contract, signed by the two companies in 1995, which saw EDS take responsibility for Rolls-Royce's internal IT systems. "We were getting less value for money because we were spending more on maintaining the infrastructure and less on new systems," he added.

Rolls-Royce is already considering extending the contract. "I think there will be a new agreement in the next few years to extend it further into the future because the business will change again," said Warner, adding that the original deal was designed to bring IT in line with the business.

"We had a legacy mainframe system and we knew we had to move towards client/server if we were to do want we wanted," he said. "The systems department was very good at building bespoke applications, but it didn't know what the business needed."

"IT was deliberately divorced from the business. Sites in Derby, Bristol and Indianapolis would have applications with the same functionality and same business processes, but they would have been built separately," he added.

Analysts generally warn that long contracts can lead to supplier lock-in. Warner is still optimistic, however. "The product life cycle is based on long-term relationships so it felt quite normal to us to sign a long contract," he said. "EDS is measured on the same terms as us - the number of engines delivered, rather than the number of Mips or PCs delivered."