In an exclusive interview with Retail Week, Sainsbury’s chief information officer Maggie Miller explained the reasons behind the three-year extension of the retailer’s outsourcing deal with Accenture to 10 years.

The company’s interim financial report, published last month stated: ‘(The extension) enables us to jointly build on achievements to date and reduces our costs by a further£150 million over the existing term.’

Accenture struck a deal with Sainsbury’s in 2001 as the retailer’s sole IT agent for its entire IT strategy. Miller recalled that the deal was part of a massive strategy to overhaul the company’s entire systems.

‘It’s emphatically not just about installing new IT, it’s more about improving our business capabilities,’ she said. ‘Having said that, Accenture was tasked with reducing the cost of service delivery by 50 per cent over the seven-year term.’

Retail Knowledge Bank’s report, IT in Retail, puts Sainsbury’s yearly expenditure at £260 million.

Accenture has already been instrumental in implementing upgrades to many core systems, such as the installation of NCR Teradata analytical software as a precursor to the launch of Nectar, and the total replacement of the retailer’s 14,000 PoS tills - in what Sainsbury’s claims to be the fastest PoS rollout in Europe.

In May, the retailer implemented a space optimisation system from Marketmax, and a demand forecasting system from Retek.

Next year, phase two of the strategy will involve automating the retailer’s in-store supply chain.

‘We’re getting some great results,’ Miller said of the optimisation systems.

‘They are really helping us focus on our ranging and improving availability.’ Miller refused to be drawn on any specific plans for the future now that the outsourcing agreement has been extended.

She conceded that RFID tagging was a likely candidate for investment in the future, but has no timetable for implementing the technology at the moment.

‘It’s good to extend the relationship to build on what we’ve achieved so far. We will finish re-platforming our systems and, over the next seven years, we really want to retain access to those core skills (that Accenture provides), so that we can build on our business capabilities quickly to react to changes in the market.’

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