As well as other areas the field of sourcing is changing in the course of digitalization. Besides traditional outsourcing projects, other and new services such as Cloud, Artificial Intelligence and Data Management are being added. In addition, classic cooperation is changing into more agile models that influence the classic procurement process.
In this agile environment, sourcing remains the core discipline of IT, the importance of which will continue to grow in the future. Sourcing does not only focus on the area of procurement, but the main focus in the future will lie on controlling, partnership-based cooperation and the further development of service providers. The quality of sourcing and the underlying sourcing strategy have a massive influence on the quality of IT service provision and the value of business support.
The sourcing strategy determines which different sourcing models are to be used in corporate IT and according to which criteria a suitable sourcing model is selected for a service or an application. The decisive factors here are the goals and requirements of the business as well as the resources of the corporate IT.
Based on the strategy, a structured sourcing process ("supplier life cycle") and subsequent effective contract and supplier management is essential. A structured sourcing process includes a clear definition of the required services, the required quality standards and the clear design of the cooperation model right from the start. Clarity at the beginning of the process creates the basis for good collaboration and a smooth service provision.
Why is there no longer a one-size-fits-all?
It can be observed that the types of services provided by external service providers are more diverse than ever - from the development of simple applications, database outsourcing to the cloud to the maintenance of the entire IT infrastructure and the implementation of large-scale software projects. Depending on the specific IT requirements, companies can choose from a wide range of services - from a specialized IT boutique to the complete package of a global player. Accordingly, the degree of outsourcing itself varies - from the outsourcing of individual services to complete full IT outsourcing. It becomes clear that different approaches have to be chosen for these different types of services. Digitalization in particular is having an impact on the new sourcing requirements.
How does digitalization affect sourcing in IT?
Digitization requires more dynamic, flexible and agile approaches. As a result, the demands placed on suppliers are changing, sometimes fundamentally, and it has an impact on the IT sourcing model. The forms of cooperation between IT and suppliers are changing, from a purely service-based to a collaborative, partnership-based approach. Drivers are agile methods like Scrum or DevOps, which require a team-oriented approach and not a classic customer-supplier relationship in run and change. In addition, cloud technologies, whether SaaS, PaaS or IaaS solutions require a different type of sourcing and the underlying suppliers and contract management.
Why doesn’t the sourcing process end with the selection of service providers?
Due to the increasing share of outsourced IT, companies find themselves in a complex network of internal and external company resources. These relationships lead to mutual requirements and dependencies which result in special challenges and questions for the IT organization ensuring that their own outsourcing projects are not in vain. The challenges include increasingly complex service provider management, lack of transparency about services and contracts, and a long time-to-market regarding the selection of service providers.
That's why it's even more important not to concentrate on individual areas of the sourcing lifecycle. Rather service provider management must be carried out from a holistic perspective. The core element in sourcing and corresponding provider management is a clearly defined strategy that takes into account the entire sourcing lifecycle.
Sourcing should therefore not be understood as a one-off discipline in the sense of tendering and concluding a contract for a service, but as a continuous process of controlling and improving purchased services and associated suppliers and integrating them into the corporate IT landscape. Sourcing is understood as an integration discipline that also achieves a considerable value contribution for IT in the sense of managing the supplier portfolio.
Our consulting services – Why 4C?
We advise you on the definition of your individual sourcing and service provider strategy based on your overall IT strategy. In addition, we will assist you in the operationalization and consolidation of your sourcing strategy as a temporary co-pilot and accompany you during implementation and integration. We also support you in the selection of suppliers and a transition to a new service provider, which includes the implementation of a clearly defined management model. We will help you to overcome the hurdles on your way or to find another way to reach your goal.
Why 4C?
We have experts in the necessary topics for a holistic view on sourcing in IT. We provide the market view as well as the relevant technical and methodological expertise to use the current challenges as an opportunity to implement an integrated sourcing approach. We advise our customers on strategic sourcing issues as well as on service provider selection and provider management. If you share our approach and you want a holistic sourcing approach to meet the current challenges in service provider management, please contact us.