UK retail giant Asda has rewarded its main IT supplier IBM with a #200m, seven-year outsourcing deal - the largest contract of its kind for IBM this year.
Asda is a large IBM user running 3090, AS/400 and RS/6000 mainframes and mid-range systems including Unix kit and electronic point-of-sale systems. The decision to hive out IT is at the heart of Asda's 'breakout' programme which aims to funnel resources into its core activities.
The deal will kick-start IT projects previously placed on the back burner, including an overhaul of Asda's supply chain and management information systems. Wireless self-scanning and Internet-based home shopping systems are also possibilities.
Mike Coupe, Asda IT director, said: 'We have the opportunity to look at new technologies, particularly distributed systems. Running IT is not core. We can throw problems at IBM.'
IBM will also inherit Asda's year 2000 bug-fix problem. 'IBM will guarantee the resources to solve the problem,' said Coupe.
Reaction from the 180 Asda IT staff that will join IBM has been mixed.
A core of 25 staff will stay at Asda to manage the partnership. Coupe said there would be no redundancies.
Asda has seen its IT department shrink recently. In January, IT head Philip Langsdale quit to join Cable & Wireless Communications.
EDS has won a 10-year, $700m outsourcing contract with EBS, one of the largest suppliers of electronic banking services in the world.