EDS to take over Thorntons' IT in model 10-year contract

Confectionery retailer and manufacturer Thorntons has outsourced its entire IT operation to EDS, after agreeing a £40m contract...

Confectionery retailer and manufacturer Thorntons has outsourced its entire IT operation to EDS, after agreeing a £40m contract with the IT services giant.

The broad-reaching deal is likely to be a model for company alliances, according to Robert Morgan, chief executive of sourcing consultancy Morgan Chambers.

"Strategic alliances such as this, that are under contract, work far better than partnerships where the companies tend to have different agendas," he said. "This is the direction deals are going in."

Under the terms of the 10-year deal, announced this week, EDS will support the delivery of a number of systems for Thorntons, including supply chain, forecasting, merchandising and electronic point of sales.

EDS will also take over support for Thorntons' servers, PC network and in-store equipment, as well as responsibility for the retailer's head office telecommunications.

An EDS helpdesk facility will provide IT support to Thorntons' network of more than 400 outlets across the UK, in addition to its head office and manufacturing facilities.

Martin Allen, finance director at Thorntons, said EDS will provide strategic assistance as well as IT services. "This is a key move for us as we develop the company over the next few years," he said. "We went with EDS because we will be able to call on the company for strategic advice, exploiting their expertise in both retail and manufacturing."

Morgan said a deal of this size was a clear indication that Thorntons, which has a turnover of £163m, has a strategy for expansion. "It could use EDS as the weight behind a hostile acquisition bid for example," he said.

Allen said Thorntons is planning to extend its brand name through various partners, such as supermarkets and cafes, as well as increasing the number of stores.

He said the company has changed the role of the operations manager to supply chain manager, to oversee the issues arising from further partnerships. In addition, he said, Thorntons has integrated its manufacturing, purchasing and financials processes into a single Oracle database, to improve efficiency.

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