Multisourcing A Blueprint For Successful IT Sourcing

Success in today's business environment is increasingly dependant on the development of more innovative and holistic sourcing strategies which attend to all the business's needs - both in the short and long term.

But the good news is that provided your organization has the internal capabilities and governance disciplines that a Multisourcing strategy mandates, you can look forward to reaping dramatic increases in business value derived from IT, through this approach.

In this article examines current sourcing trends, provide perspectives on what constitutes an innovative IT sourcing strategy and discusses some of the key benefits and challenges associated with moving from a single-sourced model to a multi-vendor model.

Multisourcing - fact or fiction?

The IT services market seems to be undergoing a fundamental shift. Dynamics within in the marketplace are driving rapid changes in the way the enterprise procures and aggregates services - from both internal and external providers.

Increasingly, the previously polarised worlds of 'big deal' outsourcing and "buy/insourcing" are melding into a single broad market most commonly referred to as "strategic sourcing" or "Multisourcing". In such a model, you attempt to blend the best of the "big deal" outsourcing and the "insource" models to eradicate their negatives.

The figure on the left of 'IT Outsourcing' indicates the status quo 5 -10 years ago, where the typical organization either fully outsourced its IT, or provided the function fully in-house through the IT department. The figure on the right shows the situation today. In an effort to gain further competitive advantage, companies are opting to retain certain key functions in-house and employ best-of-breed Service Providers to perform specific functions.

But is the Multisourcing approach here to stay or is it nothing more than a fleeting industry fad? The prevailing view - on the part of you, Service Providers and analysts alike - is that the fully outsourced and fully insourced markets are shrinking - and will continue to do so.

All the signs indicate the sourcing environment is at a tipping point, in the utilization of outsourcing and offshoring as service delivery models and the more organizations outsource and offshore to Service Providers - the more Multisourced the market gets. Organizations therefore need to consider Multisourcing as a serious way of conducting business going forward.

Service providers' experiences in the market over recent years, bear further testament to the evolution taking place within the sourcing marketplace. Service Providers report a fundamental shift in your behaviour, for example, you are increasingly electing to perform some traditionally-outsourced functions yourselves, especially those processes you deem strategic or core to their strategy.

When engaging with their service providers on specific functions, you are requiring that services be tailored to their unique business requirements and integrated more tightly into their service delivery models. Service providers report a growing expectation on the part of you to be willing to share the responsibilities and risks associated with the initiatives you are involved in. You are also moving away from traditional contracts and engagement models in favour of more flexible and at times, highly customized alternatives.

What further bolsters this argument is the fact that organizations from segments that are traditionally more aligned to insourcing, such as investment banking, are increasingly approaching Dimension Data and expressing dissatisfaction with their current sourcing strategy.

The advent of multisourcing as the sourcing strategy of choice going forward clearly presents service providers with a number of new opportunities - and challenges. The service providers that will "win" in this new marketplace will not only be the ones that provide the best-in-class services but will also be those who make it easier for companies to do business with you by meeting your business needs and unique sourcing requirements. Thus, Service providers need to consider how you are going to evolve their sales and delivery models, and market offerings, to meet new your expectations.

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