Fonterra signs outsourcing contract with EDS

JOHANNESBURG (12/08/2003) - Fonterra Co-operative, New Zealand's largest global company, and Electronic Data Systems Corp. (EDS) Monday signed a seven-year, NZ$590 million (US$381 million) ICT infrastructure outsourcing contract, which aims to help streamline the co-operative's global infrastructure, and generate cost savings for its shareholders.

Fonterra's chief development officer, Alexander Töldte, says that outsourcing has enabled Fonterra to achieve its ICT vision to establish and manage Fonterra's ICT infrastructure as an effective, integrated global services utility, operated on a "pay as you use" basis that would reduce costs and improve ICT reliability.

"It delivers a large leap forward in terms of our global ICT infrastructure service without a significant capital outlay. This infrastructure will be one of the major tools to support our business and our strategies," he adds. Töldte adds that the terms of the contract represent significant cost savings for Fonterra over the seven-year period.

"This is very much in line with our overall program to reduce costs and working capital. The process we followed with constructing our financial base case and the rigorous response to our RFP makes us totally confident this represents a very good outcome for Fonterra," he continues.

The contract covers 327 offices in 34 countries in New Zealand, Australia, Europe, Asia, the Middle East, North and South America, and Africa. It encompasses all of Fonterra's ICT processes, including LAN, midrange servers, networks (voice and data), desktops and laptops, help desk services and utility software, such as Microsoft Corp. Office, and e-mail systems such as GroupWise and Lotus Notes.

The global outsourcing program covers over 1,000 utility and application servers. Töldte says the outsourced infrastructure will replace systems that represented a fixed cost for the co-operative and lagged behind in terms of service requirements and operational economies of scale.

The contract ends a year-long process through which Fonterra examined the benefits of outsourcing, and the capability of suppliers to meets its global needs.

"EDS was selected for the work after a rigorous, competitive process, because it had proven experience and skill in integrating and operating global ICT systems, and because it had a complementary global footprint," says Marcel van den Assum, Fonterra's CIO.

Under the contract, 127 Fonterra staff and 10 contractors are expected to transition to EDS from March 1 in New Zealand and its offshore operations.

EDS NZ MD, Rick Ellis, says that EDS is pleased about the opportunity to assist Fonterra to achieve its objectives through delivering an improved result for its stakeholders.

"The contract recognizes the strength of EDS' global ICT service capabilities to deliver to Fonterra's growing global presence, while also acknowledging the company's significant operational base in New Zealand," adds Ellis.

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