Strategic Sourcing of Digital Services… what’s hot and what’s not as we enter 2020

IT is now squarely digital and a board level agenda item – relationships with IT partners can make or break business strategies & brands as well as CIO careers. This is really evident in the huge tectonic shifts in the what service are being sourced and how they are being sourced.

Our Strategic Sourcing Principal, Ravi takes us through a rapid review of what’s IN and what’s OUT, what’s HOT and what’s COLD in the strategic sourcing of digital services to cope with the next decade.

Hot or Not?

    • Hybrid sourcing is HOT – putting all your eggs in one “black box outsourced” basket is NOT. With “as a service” models, cloud services orchestration and generally easier/rapid service integration – clients now have real choice (finally!). Not that they always make the most sensible of choices – too much choice is not always a good thing as we all well know.
    • The “do – it – all” for a fixed price model is OUT – suppliers need to be the industry expert with a truly differentiated proposition who are willing to get into a real partnership to succeed in today’s RFP processes. Partnering and outcome based risk-taking are IN – “put your money where your mouth” is the norm for successful suppliers today. But equally clients are waking up to the unintended consequences of shoving all the transaction risk down the supplier’s throat and skinning them to the bone commercially in a deal negotiation.
    • Re-platforming away from the legacy captive all-inclusive monolithic platforms with “all or nothing” consumption models (a.k.a. minimum commitments) is OUT – clients have been moving to more adaptable, scalable, elastic and open platforms for years and this is really IN. Clients are willing to take more risk and migrate mission critical processes and workloads to these platforms as are their ability and confidence in consuming these services and the supplier platforms themselves also become more robust, feature-rich and easier to use.
    • Business value measurement is IN – traditional silo geeky IT metrics and SLAs are OUT. A huge shift is underway from the typical measurement of outputs to more value based “how are you making a difference to my business” measures.
    • Agile and automation at scale is HEATING UP and traditional IT delivery centric models are COOLING DOWN. Clients are now working with partners at scale with RPA and Dev-Ops where co-creation and working in teams of client-supplier staff across borders and time-zones using enabling technologies is the norm. This allows for a real “win-win” – clients can benefit from the analytics and insights from these co-created capabilities whilst allowing suppliers to get more agile, efficient and cost effective in how they deliver services.
    • Offshoring is really COLD – there is no appetite for the “your mess for less” help desks and service centres propositions in weird and wonderful places with calls being answered in eclectic accents. CEX management platforms with real-time automation driven customer engagement and service automation at scale are HOT and the entry ticket to this space.
    • Old school deal-making on the golf-course and traditional combative /adversarial sourcing techniques are OUT – digital services delivered flexibly / on demand in collaborative deal constructs and agile procurement are IN.
    • Compliance, security, data integrity and privacy as real-time risks to be monitored and managed are REALLY IN – the old standards-based approach to assuring compliance and security risk by ticking boxes once a year is REALLY OUT. Clients want to see real embedded capability and culture/DNA here – not a process-driven compliance mindset.
    • Real time software development and continuous DevOps is the NORM – agile development, product based design thinking and DevOps makes this easily possible. The traditional linear approach to software is OUT – the “specify, design, build, test and operate” model is generally rejected by clients except on the rare occasions when the risk is too high and the acceptance of deliveries/hand-offs have very large commercial and contractual implications.

So what next?
These are some of the trends I’ve been seeing as a sourcing advisor for the last 2-3 years and I think we are ½ way or so through the current cycle with another 2-3 years at-least before these trends play out and we are staring in the eyes of the next wave of change – though constant change is the only reality in today’s IT eco-system and market-place. Interesting times to be a sourcing advisor – its hard work keeping up but it’s also what makes it fun!!

About the author, Ravi Veerasubramanian

Ravi leads the Strategic Sourcing Service Offering at B2E. He helps clients maximise the value realised from outsourcing and their service partners by leading and supporting engagements across the full sourcing lifecycle. He is respected at CxO level as their “go-to-guy” when they want to leverage opportunities, address challenges and fix issues within their outsourced services and supply chain.

Previously, he held senior roles with large global business and technology services integrators and leading management consultancies. His client experience includes large telecoms, banks and pharma companies as well public sector organisations. He is also a member of the Independent Advisors Network and the Global Sourcing Association.