Boots' multi-sourcing will use up to six suppliers

Boots will use up to six suppliers competing to supply its IT products and services over the next year.

Boots will use up to six suppliers competing to supply its IT products and services over the next year.

The pharmaceutical retail company previously used two outsourcers.

Speaking at Gartner's Outsourcing and IT Services Summit 2008, Steve Brown, programme delivery director at Boots, said it decided to look for more outsourcing suppliers in 2005. This was because it was dissatisfied with the service it received.

The original outsourcing contract worked well when there was a lot of investment in systems. But the relationship soured when the work changed to operational support, he said.

"We wanted more cost reduction but this was seen as the service provider's loss of revenue so engaging them was hard and our relationship suffered very badly."

Boots upgraded its IT in 2002 after 15 years' underinvestment. It signed a £710m, 10-year contract with IBM global services to overhaul its IT infrastructure and its central application development. It also signed a £54m, 7-year contract with Xansa for support operations.

Phil Morris, managing director at Equaterra, said outsourcing contracts need to change when the services provided change from being geared to major IT change to being operational services.

"I would not be surprised if a service provider lost interest when the discretionary spend ends," Phil Morris said.

"Multi-sourcing does not particularly overcome this problem but brings in best of breed outsourcers that want to do operational tasks rather than big change programmes," he added.

Boots said it will not use more than six outsourcers. The company is keeping its business system management team and service management in-house, including helpdesk and project management.

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