High Street retailer Boots is to complete the outsourcing of its IT operations by handing over the maintenance and development to Xansa, the business consulting, IT and outsourcing company.
The £54m deal will see Xansa installing mainly SAP software for Boots over the next seven years. This is expected to deliver cost savings of £30m over the period.
Xansa will replace legacy systems with new business applications, and in some areas will integrate applications from other vendors as well as SAP.
As part of the project, Boots's different business applications will be classified into three categories: mission-critical, backbone, and non-essential.
Using SAP for the backbone applications upon which all other applications depend is a "no-brainer" because it reduces integration costs, said Allan Wood, director at Xansa.
"For mission-critical applications other vendors will be considered," he said.
The Xansa deal forms part of Boots's overall IT outsourcing project. Last week it was announced that IBM Global Services had won the contract to run the retailer's IT infrastructure for the next 10 years.
Such deals involving multiple outsourcers were becoming more commonplace, said Richard Holway of analyst organisation Ovum.
"Getting in different people to do different jobs that require different skills is eminently sensible. I believe the days of handing it all over to one gigantic outsourcer are coming to an end," he said.
Boots plans to use savings from the deal to develop new retail solutions.
The deal with Xansa allows Boots to offset some of the risk by linking payment to performance. Boots has initially guaranteed a £54m investment with Xansa, but this could rise to £90m if the outsourcer meets the performance targets.
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