The collapse of Sainsbury's Accenture 10-year outsourcing deal with Accenture shows just how spectacularly outsourcing can fail if executed for the wrong reasons.
The supermarket giant outsourced its IT operations to Accenture in 2000, but the cracks in the £1.7bn relationship began to show last year, when problems with its supply chain modernisation project left bare shelves in some stores.
In an official statement, the supermarket says that "change of focus" was behind the bold move, and that it was time to "rebuild its expertise in-house". But the National Outsourcing Association (NOA) says this points to major problems right at the scoping stage of the deal.
"Sainsbury's says that now is the right time to rebuild expertise back in-house, but if done well, outsourcing does not have to mean you lose expertise," comments NOA chairman Martyn Hart. "You should have detailed knowledge of a project to manage it effectively."
Sainsbury's is not the first high-profile company to snatch its IT resources back in-house. Prudential and JP Morgan Chase have made similar announcements and are part of a growing trend, identified in a recent NOA report, for bringing IT back in-house.
"Sainsbury's apparent disillusionment with outsourcing is evidence that it went into the contract unprepared for the process. If companies have had their fingers burned through outsourcing, then the likelihood is that they leapt on to the outsourcing bandwagon without having the correct procedures in place," said Hart.
By submitting your email address, you agree to receive emails regarding relevant topic offers from TechTarget and its partners. You can withdraw your consent at any time. Contact TechTarget at 275 Grove Street, Newton, MA.