Sears plans to outsource part of IT infrastructure

Computerworld - NEW YORK -- Sears, Roebuck and Co. in March plans to strike a deal to outsource a substantial portion of the technical infrastructure that its IT department currently maintains.
The outsourcing decision is one of several key IT deals that the retailer plans to finalize early this year to help reduce costs, improve margins and drive up sales, CIO Gary Kelly disclosed at the National Retail Federation conference here earlier this week.
Outsourcing a significant portion of the technical infrastructure -- a decision that Kelly acknowledged is "huge" -- will have an impact not only on technology but also on the Sears IT personnel who support it. Kelly said about 270 of the company's 1,160 IT staffers currently manage the systems that the company plans to outsource.
"We don't know how many of them will remain with Sears, how many will work with the new company. That's yet to be determined," he said. "Usually, the company that acquires the contract to own and operate the infrastructure hires some portion of the people that do the work for the customer."
That's what happened at Target Corp., for instance, when it signed a major outsourcing deal with IBM Global Services five years ago.
Kelly, who has been CIO at Sears since October 2002, said the company spent much of the past year assessing its IT infrastructure and saw two options to address the weaknesses it found: "remediate it internally or have it outsourced." Sears chose the latter for its desktops, server farms, routers, voice and data network, decision-support technology and systems that support Sears.com, he said.
"There's no competitive advantage to having a better e-mail system and a different type of voice or data network," Kelly said. "It's fundamentally a commodity that can be provided better as a service."
However, Sears won't outsource its in-store retail systems or the wireless application and other technologies that support its product-repair service business. Kelly said the company wants to invest more time in creating systems that will differentiate Sears from its competitors.
Kelly said Sears is evaluating service providers for the outsourcing contract and plans to make its decision by early March. The five being considered are IBM Global Services, Hewlett-Packard Co., Electronic Data Systems Corp., Computer Sciences Corp. and Affiliated Computer Services Inc.
Sears will continue to have project managers, architects, developers, business analysts and testers to support applications, operations and systems, Kelly said. It will also provide direction on the technologies being outsourced.
A survey conducted by the NRF Foundation and BearingPoint Inc.,