BP drilling for cash in £92m supplier consolidation deal

BP drilling for cash in £92m supplier consolidation deal

Oil giant slashes number of suppliers to save time and allow bulk buying

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BP has signed a five year deal with two resellers to slash its commodity hardware and software costs.

Under the $150 million (£92 million) contract with Computacenter and CompuCom, the oil giant will cut relationships with over 540 IT suppliers, and procure mainly through the channel. The move is part of a large cost saving drive by the company.

It aims to save around £14 million through the new deal, by dealing with fewer suppliers and by being able to win volume price discounts. Using more standardised IT would also contribute to the cuts, it said.

Dana Deasy, chief information officer at BP, said that cutting ties with the suppliers would “significantly remove cost” while reducing complexity.

The move showed businesses saw benefits in a return to buying through the channel, according to some analysts. Anthony Miller, managing partner at TechMarketView , called the arrangement an “old-fashioned reseller deal”.

The “attraction of cutting out the middle man” has “distinctly tarnished”, he said. This was because many PC manufacturers offered similar kit, with "similar supply chains and logistics”.

BP has been targeting the removal of $3 billion (£1.8 billion) from costs, through staff cuts, and operational and technology changes. Five months ago, it cut ties with 35 application development providers and signed £1.5 billion worth of deals with IBM, Accenture, Wipro, Infosys, and Tata Consultancy Services.

Last month, it outsourced global communications to T-Systems and Siemens in another bid to reduce the number of suppliers it works with.

Oil rival Shell has also been making aggressive moves to cut its costs and improve its processes. In November, it said a massive IT reorganisation and large outsourcing deals had helped it remove over £600 million from its annual costs.

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