InformationWeek

Cost cutting has been a focal point of Staples' IT operation since the company's inception, says Light. The IT philosophy of establishing long-term relationships with a limited number of IT vendors, including ICL, IBM, and Hewlett-Packard, has consistently reduced costs and provided high-quality service. When Staples decided to investigate possible outsourcing partners for the in-store project work, it didn't issue requests for proposals or map out months of vendor meetings to talk with prospective candidates.

"We don't put our vendors through the wringer every time we go looking for services," says Light. "Because we don't do that, they provide their best people to us, and we get much better productivity."

A recent Computer Sciences Corp. study of outsourcing contracts supports Staples' non-RFP perspective. In studying projects worth more than $100 million, the IT services firm determined that most of the dollars awarded last year were won without competitive bidding--63% of the total dollars represented by outsourcing contracts were sole-sourced, up from 37% in 1997.

Sole-sourcing awards contracts based on relationships instead of the customary RFP competition. The process can eliminate much of the cost for all parties. CSC says competitive bidding can cost vendors hundreds of thousands of dollars--costs that are eventually passed on to customers. It also points out that reviewing vendor proposals is a major time and cost commitment for client companies.

Another plus, says Light, is that working with one vendor on all store technology requirements lets his team be much more nimble and the IT infrastructure become uniform. This lets IT leverage capabilities more efficiently and quickly.

"Everything we do is oriented toward minimizing cost," says Light. "We want to put as many capabilities as we can on what we call 'auto pilot.' We need to zero-in on the things that are going to make a big difference." Specifically, Light points to Web-based technologies.

Working with a single services vendor also eliminates confusion when store technology problems arise, says Light. There's no time wasted determining who's responsible and tracking down vendors.

Staples' outsourcing approach is very sound, according to one services expert. "Outsourcing is all about leveraging the talents and resources of an outside, specialized firm to support your business success," says Michael Corbett, president of the Corbett Group, an outsourcing consulting firm. "In this case, Staples has done just that. It's developed a long-term relationship with ICL, and as its needs have changed it's expanded that relationship to fit the new realities."

In the past year, ICL has completed more than 120 in-store installations of POS equipment and systems using a frame-relay network, credit-and-check authorization technologies, and Web-based special-order processes. At this point, it has finished 25 of this year's projected 170 new stores.