How to Build a Sourcing Strategy You Can Be Proud Of

Global sourcing advisory firm, Alsbridge Inc., today released a report which offers insight to help CIOs decide on the best sourcing solution for their organization.

“There are many things a CIO must consider when it comes to developing a sourcing strategy,” says Ben Trowbridge, CEO of Alsbridge. “Technical advances such as Cloud Computing means there are more alternatives than ever to evaluate. With all of the potential sourcing configurations, it has become increasingly difficult for CIOs to assess which solution is best for his or her organization.”

The report from Alsbridge lays out the top five fundamental attributes that should be used when developing and evaluating a sourcing strategy including:

1. Cost - Cost is usually the primary driver for sourcing, therefore it is important to look at all components of cost. Make sure you fully comprehend the new costs, the costs you can eliminate, and the costs you will incur as a result of additional management and oversight of a new sourcing contract. Also consider the impact of reducing capital expenditures and freeing up cash to invest in other opportunities.
2. Speed - There are two components of speed - speed of processing and speed of transformation. First, you want to ensure system performance and end-user experiences are not negatively impacted. In fact, you will probably look for some aspects to improve. Second, assess whether moving to a new sourcing scenario can quicken the pace of transformational change. Perhaps a change in sourcing will allow you jump-start your transformation and get to the end result faster than the way it is currently configured. 
3. Risk - Risk-related factors are sometimes overlooked but are important aspects of a quality sourcing strategy. Determine how a different sourcing strategy affects delivery risk, including the reduction of single points of failure. Evaluate the risk of under-investment in the future. Also remember that there is a certain amount of risk reduction from a cost perspective by moving to predictable costs that vary in a predictable manner as volumes change.
4. Quality - An important part of making a sourcing decision is assessing the ability of the potential new provider to deliver services according to client expectations. This should not only include service level agreements, but also how well they will mesh with your current operational processes and how well they coordinate with other providers to deliver seamless end-to-end services. Will the sourcing provider help you deliver better end-user and customer experiences?
5. Flexibility - What can the potential sourcing provider do to improve your agility and flexibility? Cloud computing services obviously come to mind, with the rapid ability to provision and de-provision as needed. However, other traditional and niche providers may also provide flexibility through their products, services, methodologies, contract terms, and ability to work with you to innovate new solutions in the future. The overall intent is to ensure you are not locked into a technical solution that doesn't make sense at a later date.
   

“These five sourcing objectives can serve as the foundation for a detailed set of evaluation criteria to help CIOs objectively evaluate their sourcing options,” Trowbridge explains. “While cost is usually the primary driver, all of the objectives should be used to some degree, and weighted in a way that reflects the unique requirements of the organization.”

For more information or to read the full report click here.

About Alsbridge Inc.

Alsbridge provides world class sourcing advisory and benchmarking services for IT, finance and sourcing executives. With over 150 consultants located globally, we’ve helped hundreds of companies reduce costs and get more value from their vendors. Our experienced consultants leverage proprietary tools and information databases to identify and engage the optimal vendors for your situation, negotiate best practice terms at fair market prices, and improve the way you work with your vendors. Alsbridge clients utilize the most cost effective and value added sources globally for IT infrastructure services, hardware and maintenance, network services, software and maintenance, application support and development, business processes and cloud services. Our commitment to delivering value to our clients has made Alsbridge a distinguished member of the 2010 Inc. 500 fastest growing privately held companies in America.