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Indirect Procurement: The Hidden Vault of Gold

Are you tired of the "O" word? Are you interested in learning what other competitive advantages fellow procurement heads are leveraging to cut costs, improve results and increase their velocity to savings? Would you like to hear why strategic sourcing offers an astounding business case without many of the usual less savory facets of outsourcing?

Join Alsbridge Managing Director, Chip Wagner, for an eSeminar to hear live examples of companies that have a new hero in the head of indirect procurement and learn if the juice is worth the squeeze.

Wouldn't it be interesting to find out if there is a hidden vault of gold in your company?

5 Steps to Unlocking the Secrets of Cloud Sourcing

The evolution of service delivery models over time is significantly influenced by the level of business and technology innovation that occurs in the marketplace. Clients will need to change their cloud sourcing strategies, and providers will need continued investment in select emerging technologies in order to capture the promised benefits of new service delivery models.

Client organizations driven by economic and competitive forces continuously look to their IT service providers for improved economies of scale, productivity and lower costs.

Similarly, providers are driven to invest in new technologies to help the enterprise create growing interest in their product and service offerings, differentiate themselves from competitors, create barriers to entry in the markets they serve and yield higher returns for their shareholders.

Despite a lack of clarity around whether cloud sourcing is the next evolution of IT service delivery models, it is increasingly clear that organizations must re-evaluate their strategic sourcing alternatives.

Are we seeing yet another fundamental shift in today's established IT service delivery models? The emergence of cloud sourcing services, generally defined to include: Software-as-a-Service (SaaS), Platforms-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS) appear to be edging into more established managed service delivery models.

There are five tactical steps we suggest organizations consider as they try to answer this question:

1. Recognize that as technological innovation and business change drive the evolution of IT service delivery models, new sourcing strategies are required.
2. Assess how conducive your organizations' current IT infrastructure and platforms are to the introduction and roll-out of Cloud sourcing in support of today's and tomorrow's business requirements.
3. View cloud sourcing as an expansion of delivery alternatives rather than a replacement of today's infrastructure and software environments.
4. Initiate a dialogue with key stakeholders and key partners/providers to: define key assumptions and critical operating parameters and determine how much flexibility exists in areas that may or may not be of strategic importance, including operational control and visibility, IT security, and performance level management.
5. Develop a contingency plan that is aligned with your sourcing strategy.

In conclusion, emerging technologies force buyers and sellers of IT services to behave differently. Consequently, sourcing strategies must also change to meet new deployment alternatives. This article offers an insightful view of the market to help you align your traditional and cloud sourcing strategies with an evolving IT services environment.

Establish an Effective Sourcing Governance Process Early

There are many reasons for value leakage in a sourcing agreement such as excessive capital spend, budget expansion, scope creep on projects, delivery misunderstandings, etc..., that are mistakenly identified as the root cause of a failed outsourcing relationship but, they are all symptoms of the lack of an effective outsourcing governance process.

Alsbridge research shows, when outsourcing fails to achieve expected results as initially intended, the most prevalent root cause is often the governance process and structure.

Many companies have governance organizations in place prior to outsourcing but, all too often they set up to operate efficiently or effectively. Without an effective governance organization in place, the likelihood is that the same results will be achieved post services transition and sourcing with a new provider as were experienced prior to the relationship.

There are at least three options on timing the development of an effective governance organization:

1. Prior to the sourcing process to effectively monitor the current environment
2. During the sourcing process designed to accommodate both the retained and outsourced domains
3. Post sourcing process after challenges are discovered and value leakage has taken hold

There are typically two different measurements for a successful outsourcing relationship. The provider identifies success through cost savings and renewal probability. The client identifies success as achieving their desired financial results and operational efficiency which is usually the result of having a strong governance organization in place earlier rather than later.

Timing the development of a successful governance organization has an important direct impact on the success of a sourcing arrangement, though businesses will benefit from the right governance organization in place, even without an outsourcing arrangement.

How to Control Cloud Sourcing in Your Organization

Many organizations currently investigating the opportunities and risks associated with adopting cloud sourcing solutions are doing so without fully understanding how to manage the future of those technologies. Getting answers to several key questions can help IT and sourcing executives better understand and manage the future of cloud sourcing within their organizations.

Each year Information Technology (IT) users are exposed to an increasingly wide range of innovative technologies supporting both business and personal applications. The proliferation of end-user based technologies and the relative ease with which they are deployed, has contributed to a significant increase in the level of understanding of technology by growing numbers of individuals.

Why is it Important to Manage Cloud Technology?

As the level of sophistication in an end-users 'use' of technology grows, traditional barriers to adoption are lowered. New cloud sourcing applications and services are relatively easy (even for the less savvy users) to purchase and set up. Therefore, it is increasingly incumbent on an organization's IT and sourcing executives to lead the enterprise in its understanding of these new technologies, experiment with cloud technology in the business, and manage the process for adopting and deploying cloud-based solutions across the enterprise.

Managing the Future of Cloud Technology

Getting answers to several key questions can help IT and sourcing executives better manage the future of cloud sourcing within their organizations. First, it is important to know whether or not IT and non-IT executives within the enterprise believe cloud computing can drive value to the business. Second, it is important to know how their companies might realize value from the adoption of cloud technology.

Developing a Cloud Decision Framework

Organizations can better manage the future of cloud computing by developing a decision framework that positions cloud-based services within the context of their existing technology plans and sourcing strategies.

In Summary

Many organizations are investigating the opportunities and risks associated with adopting cloud-based solutions in their business, without fully understanding how best to manage the future of those technologies within the context of existing technology plans and sourcing strategies. IT and sourcing executives must work collaboratively to develop a cloud decision framework within the organization while maintaining control over the introduction and deployment of cloud sourcing technologies across the enterprise.