Bringing innovation to sourcing for smarter business performance
As technology changes continue to accelerate, so do the expectations and ambitions of business leaders. With social, mobile, cloud computing and big data converging, business leaders are recognising the signs of another, bigger groundswell of change. And they want to be there early, capitalising on opportunities to innovate, working with key partners.
Decision-makers who source more broadly, and are doing so to drive innovation, are also outperforming their peers in terms of what matters to them – revenue and gross profit growth and many other financial measures. Equally important, they are architecting and managing those services relationships quite differently – often tying metrics to business outcomes.
In July, I hosted a Twitter debate to further draw out thoughts around how experts are seeing the sourcing landscape evolve. The debate ran for three days with around 360 tweets creating over 800,000 impressions.
|Example tweets from the debate
#partnersourcing was populated by influencers from analyst firms, publications and other business establishments, as well as IBM employees, who all weighed in with their key word and explanation on what they saw as important for the future of sourcing. Over 80 key words were generated and this is what we saw:
We then worked through all the tweets and distilled the suggestions down to a selection of key words that told a story for the future of sourcing:
What is clear is the need to be jointly focussed on business OUTCOMES and to work in SYNERGY with clear SHARED objectives and mutual RISK/REWARD.
Changing nuances are about approaching agreements with FLEXIBILITY built in – within boundaries – to adapt as business needs change and to ensure that a mutual definition of INNOVATION is pre-defined and RESULTS are realistic and achievable.
Many organisations are also making sourcing decisions based on the vendor’s additional capabilities – such as BROKERING multiple sourcing providers and having the necessary SKILLS in-house to manage hybrid environments, such as INTEGRATING across traditional, managed and CLOUD workloads.
COST and EFFICIENCIES have not gone away – business rather than just infrastructure OUTCOME is the change in emphasis.
Recommendations made by Gartner also suggest that “cost reduction focus ignores opportunities to improve the business” and that “providers must evolve unit-based pricing to outcome-based and value-based pricing”.
An example of this is UniCredit who is introducing new service models and a cloud-based infrastructure for its data centres. As a result, UniCredit clients will be able to access new and innovative services that meet the growing demand for sophisticated financial services in Europe. Cloud analytics will make it possible for UniCredit to better predict and understand trading in financial markets, manage spending and provide innovative customer solutions.
I think it’s safe to say that there does seem to be a rumble of change in sourcing and we are seeing more innovative practices being brought into the area. Cloud computing is just one way of enabling this change as it brings freedom and flexibility in the choices that organisation’s can make.
Indeed, this shift in mindset is also one reason businesses are revisiting the word “outsourcing” to describe sourcing relationships. A survey by analyst firm HfS Research indicates 63 per cent of business and IT services buyers would like to drop the term “outsourcing” entirely.
Tony Morgan is Chief Innovation Officer, Strategic Outsourcing, IBM UK & Ireland.