7-Eleven: Financial Services With Your Slurpee?7-Eleven: Financial Services With Your Slurpee?

7-Eleven Inc. is adding financial services to its Slurpee and hot-dog business, and the new focus is transforming its relationship with longtime IT service provider EDS.

Earlier this month, 7-Eleven, a $9 billion convenience-store chain, signed a seven-year IT outsourcing contract extension with EDS worth about $175 million. Rather than structure the deal on a flat-fee basis, it will adhere to a utility-pricing model that will vary based on 7-Eleven's use of IT services provided by EDS.

7-Eleven isn't alone in its move to utility pricing. Demand has increased in the past six months. EDS signed chemical maker Solutia Inc. in St. Louis and Coors Brewing Co. in Golden, Colo., to utility-based service contracts. Competitors IBM Global Services, Compaq Global Services, and Hewlett-Packard Services also offer utility services. EDS and IBM Global Services lead the way with a multidisciplinary approach to on-demand IT services, says Gartner senior analyst Ron Silliman.

The IT capabilities that EDS provides under this model have let 7-Eleven change its business model, 7-Eleven CIO Keith Morrow says. The Dallas chain plans to offer virtual commerce terminals at 3,500 retail locations nationwide by the end of 2003. The terminals will let customers withdraw and deposit money, cash checks, pay bills, and buy money orders. Since September, 7-Eleven has piloted virtual commerce terminals in 98 stores in Florida and Texas.

Although the company already offers automated teller machines, 7-Eleven rents them from NCR Corp. and pays for access to a variety of financial-services networks. 7-Eleven will own and operate its virtual commerce terminals and network with the help of partners American Express, Certegy, NCR, and Verizon.

EDS is hosting and providing managed services for 7-Eleven's EMC storage and Veritas file-management systems, Oracle Financials, and Oracle8 database. EDS is also providing project-management and programming services for the chain-store owner's planned migration to Oracle E-business Suite 11i in October.

Morrow declined to give the expected savings but says "the cost is considerably less than we're spending now."