IT Sourcing: A Marathon Not A Sprint
Monday 30th April, 2018
1990s: ‘The Starting Line’
When I started my Sourcing career in the late 90s the natural order of things was simpler.
Professors Wilcox and Lacity had started their never to end World Tour extolling the virtues of outsourcing. The future looked bright and everyone seemed to know their place.
I had a healthy selection of Tier One players for deeper pockets and brand security, a solid group of Tier 2s for the more cost-conscious buyer and Tier 3 specialists that could form a best of breed alternative.
Indian vendors were about, but still largely in the apps space with only sporadic point solutions in the infrastructure arena. CMMi maturity could be reliably translated into productivity and hence PxQ worked to deliver no nonsense arbitrage savings.
Early Noughties: Indian vendors broaden their offer
For me the game started to change in 2003. My airline client was then facing challenging market conditions post 9/11. Whilst they were already offshoring some apps work, they could see their biggest competitor leveraging more and more offshore IT enabled business services. I helped them assess the potential in all their airline specific back-office processes. The following year, we went to the market with an ‘Indian only’ tender for full spectrum infrastructure services.
It may have been a close-run thing, but I still reckon this deal (and not Somerfield's) was the first full scope deal in the UK. Either way, my client is still trading…and still with the same supplier!
2010’s: Market disruption is the new norm
More recently, I’ve seen the more established Eastern infrastructure service providers grow in confidence winning international deals and even starting to crack the hardest of nuts and broker real competition and a business case for supplier change in network services.
More generally the market has seen enormous consolidation. Of the 75 organisations in my Little Black Book of ‘go to’ service providers back in 2007 (spanning Western Tier1-3, Indian and telecoms specialists), almost half have been swallowed up, withdrawn from the market or ceased trading. It’s been a bruising period for many. Survival of the fittest one supposes.
So far so good! More competition and globalisation delivering better service and savings…or does it?
Which suppliers will survive?
My kids say the cartoon character I’m most like is Mr Incredible, though I’m concerned this may be a reference to girth rather than his other attributes. I do, however, have that wearisome feeling of having to save the world AGAIN every time I catch a supplier falling short commercially, in service performance or simply in their posture towards their (and my) clients.
I started out thinking this was just a Tier 1 phenomenon as big transformation promises failed to deliver the expected step change and the brand premium started to look tarnished.
However, things catch on fast in IT and soon enough the ‘we’re in this together’ message from Tier 2s had a touch less sincerity about it.
Even those ‘it does what it says on the tin’ Tier 3s seemed to be losing focus on client needs providing a more and more vanilla service in the pursuit of margin.
As for the Indian suppliers, it seems that, like cricket, they are keen to beat us at our own game!
So, these days whether I look East or West I hear grumblings about doubtful value for money, mediocre service and a general lack of strategic engagement. It was, then, no surprise to me that the 2018 Coeus Survey reported back a widespread lack of transparency that is holding organisations back from their core business goals.
Suppliers appear to be too introverted in their perspective. They may be forgetting that doing the right thing, continually delivering an excellent outcome for the client at a fair price, is what will keep them in the half that survive the next two decades. In the meantime, I will carry on picking up the derailed carriages, brushing them off and putting them back on their tracks.
What to do now?
If my reflections on the past chime with your own experiences, you can take some comfort from the fact that you are not alone.
Other things haven’t changed too…like CEO’s scratching their heads and wondering why it’s all so difficult while CIO’s come and go through the revolving doors.
Finding the right supplier partner continues to require the same disciplined approach that it always has. The market will continue to shift around unpredictably. New solutions and technologies will forever lead us to question our past decisions with the benefit of hindsight. The need to bake in even more flexibility in service and supply has never been greater.
It’s not all doom and gloom though. The value potential from a well-executed sourcing deal remains compelling and the successes continue to quietly outweigh the high-profile train wrecks. Realising that value is a long haul requiring continued effort and vigilance. Simply put, it is a marathon not a sprint!
So, chin up and I’ll see you at the finishing line…or maybe on the route!
Blog post by the Coeus Consulting Sourcing Lead, John Gorrell.
Currently John is a Finalist in the 'Strategic Leader of the Year' category in the Global Sourcing Association's Professional Awards.