Sainsbury's to Outsource IT and Payroll Functions

LONDON; Aug. 22, 2000 - J Sainsbury plc announced to its staff today that it is planning to outsource its supermarket IT functions to Accenture. The two companies are currently finalising details of the arrangement which are subject to final negotiation and approval by the Boards of both companies at the end of September 2000.

The contract will encompass the designing, building, implementing and running of all IT systems and networks for Sainsbury’s Supermarkets. Circa 800 employees will transfer to Accenture which will also take over responsibility for, or manage, all Sainsbury’s Supermarket’s current IT contracts with third party suppliers. Further details of the agreement will be announced following final approval of the contract by the Sainsbury’s Board.

Sir Peter Davis, Sainsbury’s group chief executive commented "I said at our preliminary results announcement in May that we needed to improve our business efficiency radically and with speed. The age and complexity of our current IT systems are hampering our ability to perform and develop and our required rate of change is made even more crucial with our ambitions for e-commerce.

"We currently spend in excess of £200 million a year on our supermarket IT systems and operations. It is essential that we get better value for money and through Accenture we have identified a customer-centric platform which gets us where we need to be and fast. It will drive a step-change in our IT capabilities and help us deliver competitive advantage to our customers and cost savings to our shareholders."

John Adshead, Sainsbury’s group board director for IT added "Sainsbury’s has some excellent IT talent and expertise but our current systems have evolved over many years and are costly and complex to run. This move will create a fundamentally more effective partnership between IT and our business and give colleagues the opportunity to work with state-of-the-art technology in a company which has IT as its core competence."

Bob Willett, partner, Accenture, said "Our goal is to enable Sainsbury’s to achieve a quantum leap in IT capability to support its business strategies. As the Sainsbury’s board concentrates on rebuilding the strength of the brand, Accenture will ensure it has the necessary systems in place."

In a similar move, Sainsbury’s is also completing discussions with Rebus Human Resource to outsource its current payroll operation for Sainsbury’s Supermarkets, Group departments and its pensioners. Circa 50 employees will transfer to the specialist payroll provider later in the year.