Naspers company N-Direct has extended its strategic sourcing contract for application development, maintenance and support with Software Futures until 2006 in a deal worth R17.5 million.
The deal follows a successful 12-month contract in 2002 for a capacity-based outsource delivery application providing development services and the implementation of resources to maintain, support and develop enhancements to N-Direct's retail platforms.
N-Direct is a division of Nasboek and holding company of direct marketing brands Kalahari.net, Leisure Books, Leserskring and CD Music Club.
"Outsourcing our entire IT operation allows us to focus on developing the business, knowing the technology backing the operation is in place," says Hein Pretorius, CEO of N-Direct.
Substantial cost reduction, guaranteed delivery of site enhancements and reduced risk will make N-Direct's management systems less resource-intensive and more process-driven, says Pretorius.
The three-year deal secures more predictable budgeting for IT expenditure, and the consistent delivery of enhancements in six-week iterations rather than annual cycles, enabling the conceptualisation of business requirements into tangible, regular and predictable delivery.
The implementation of best practices and control measures to ensure IT is at the core of the organisation has been identified as essential to ensuring consistent quality throughout the business.
"We've provided N-Direct with an insight into how IT can be used to innovate the business model, and how it is possible to deliver on creative retail ideas," says Sean O'Connell, general manager at Software Futures. "Flexibility is key to running e-retail brands successfully. N-Direct has to be able to make changes to its sites regularly, when the business requires it - without compromising on working productivity."
N-Direct's decision to outsource the company's IT follows the trend to adopt core-competency-with-external-sourcing strategies that are combined with flexible organisational design, says Brian Harding, head of Strategic Sourcing at Software Futures.
"Our approach to the N-Direct deal highlights our approach to strategic sourcing. For sourcing of any nature to be successful, it needs to be approached from a strategic perspective, as well as be linked to the overall business strategy. With N-Direct we united IT systems and delivery with business imperatives, ensuring IT strategy was integral to the core business objectives."
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