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IT Sourcing Strategy                       Sameer Paradia
Contents           •                     g               What is IT sourcing           •   Types of sourcing           •  ...
WHEN WAS YOU LAST THOUGHT OF        IT STRATEGY?B iBusinesses are thi ki diff                thinking differently about th...
What is IT Sourcing?                  g•   Method to select suitable party to deliver the IT    activities / process in al...
Various ways of sourcing decision making                             y            g               g                   Depe...
Sourcing Models                                  g                  vities                               …helps to achieve...
Types of contracts with partners                      Various types of contracts are                               yp     ...
Sourcing Driving factors•   Business priorities•   Value creation for business: IT Cost to business benefit ratio•   Preva...
Everything in strategy is very simple, but that   does not mean that everything is very easy.                           y ...
Sourcing StrategyContent•  Strategy Team representation from of CEO, CFO, CIO, Business unit heads, Legal team,   Risk man...
Strategy Management OfficerManage and Improve• Current Performance  vis a vis expected  business outcome• Contractual  obl...
Importance of Sourcing Strategy Aligns IT with business and ensure IT gets all support and funds from  company Keeps com...
Summary   •   Well defined sourcing strategy must exist to select right              partner depending on its value add in...
Sameer Paradia (at sameer_m_paradia@yahoo.com)Practicing IT services for 20+ yearsAcknowledgment: All the pictures are dow...
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IT Sourcing Strategy

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Importance of having a right Sourcing strategy is key to success for CXO. It has to be correct blend of partners both internal as well as external. The strategy can be arrived only if business goals are understood correctly. This deck shares an approach and ways to arrive at IT Sourcing Strategy.

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IT Sourcing Strategy

  1. 1. IT Sourcing Strategy Sameer Paradia
  2. 2. Contents • g What is IT sourcing • Types of sourcing • Driving factors • Sourcing Strategy • Summary
  3. 3. WHEN WAS YOU LAST THOUGHT OF IT STRATEGY?B iBusinesses are thi ki diff thinking differently about th i tl b t theirIT Services. They are no longer content with stand alone IT activities. IT has to align and strategies based on business and market space.
  4. 4. What is IT Sourcing? g• Method to select suitable party to deliver the IT activities / process in alignment with business goals• Ways of decision making for sourcing – Discipline – Strategic g – Routine• Important to ensure IT meets customer changing needs
  5. 5. Various ways of sourcing decision making y g g Depending on criticality of IT activity and its impact on business, company decision making may happen. WAY TO SUMMARY ngle way SOURCE w Definition: Systematic way of selecting delivery partner by IT owner Method: Depending on partner capability, risk assessment, cost, SLA Discipline Selection: Best technical and commercial proposal wins. Multiple partners might be chosen Types: Major IT operations expansions upgradation operations, expansions,Not a sin Definition: Business owners take decision to chose IT partner depending upon collaboration with them to bring positive impact on mutual business Method: Both parties become buyer and seller to each other p y Strategic Selection: Based on mutually accepted business plans Types: •Partnerships between two service providers in same industry •While sharing of same customers group Definition: Generally IT middle management and purchase department select partners for mundane IT activities Method: Mostly on cost. Existing well performing partners are given first right of refusal Routine Selection: •Rate contract R t t t •Renewal based on lowest bid Types: No fix partners 5
  6. 6. Sourcing Models g vities …helps to achieve measurable improvement in the value IT delivers to the business through a clear sourcing strategy, partnership ecosystem and focus on business goals. erform IT activ KEY CHARACTERISTICS MODEL TYPE PROFILE INSOURCING • Developing inhouse skills and capabilities A few companies still remain focus on this • Most of the activities by default done m traditional method Removes dependency of method. internally organization on external partners. • Traditional way • Blend of multiple partners from internal MULTISOURCINGto pe teams and external service providers Selective outsourcing among multiple partners. • Reducing risk and taking benefits of multi Both inhouse and outsourced partner co exists partner competition to meet business goals. • Balanced way of sourcingt OUTSOURCING ays • Many a times a single partner act as Single service aggregatorwa A long tenure single contract with single • Pushing more and more activities to partner. Both the parties put their skin in game. external partners Works well for supplier in long run and only if • Long term waiting requires to know the customer business grow as expected. outcome
  7. 7. Types of contracts with partners Various types of contracts are yp possible with partners depending on the business requirements. • Service Level Agreement based • Business outcome based • Utility based (Pay on use basis) • Cost improvement • User experience enhancement (not ( t necessarily i il involve ROI) l • Reducing asset risk in company balance • Legal bindings • Revenue sharing • Risk based contract
  8. 8. Sourcing Driving factors• Business priorities• Value creation for business: IT Cost to business benefit ratio• Prevailing economic & market space conditions• Risk assessment of engagement with p g g partner• Time period of sourcing decision• Expansion in other geography – local culture, laws, skills
  9. 9. Everything in strategy is very simple, but that does not mean that everything is very easy. y g y y- Carl von Clausewitz
  10. 10. Sourcing StrategyContent• Strategy Team representation from of CEO, CFO, CIO, Business unit heads, Legal team, Risk management• Strategy Management Officer• Documented strategy with implementation plans and periodic reviews• Holistic approach of IT service procurement for short and long term• Resource selection criteria• Define set of quantitative matrices for performance measurement Guidelines • Describes methods, process and logic to select partner for carrying out IT activity • Includes periodic reviews and implement Governance across all stakeholders • Converts client – vendor approach to partnership approach with various service providers • Complete alignment with business vision • Agile to change with any deviation in business • Exist for medium to long term with capability to measure effectiveness from early stage g p y y g • Closed loop to capture customer feedback
  11. 11. Strategy Management OfficerManage and Improve• Current Performance vis a vis expected business outcome• Contractual obligations by g y partners• Risk management• Continuous Improvement• Learning from market place and competitors• Feedback from customers and
  12. 12. Importance of Sourcing Strategy Aligns IT with business and ensure IT gets all support and funds from company Keeps company ahead in market space Creates value network in core business process Leverages on sourcing partners’ capability to add value in business E Ensures IT in line with corporate governance and reduce project failure risk i li ith t d d j t f il i k Controls IT operations cost
  13. 13. Summary • Well defined sourcing strategy must exist to select right partner depending on its value add in core business • Medium to long term consideration must be done • Incorporation of internal customer feedback • Business customers requirement must be prioritized over IT department views, to remain successful
  14. 14. Sameer Paradia (at sameer_m_paradia@yahoo.com)Practicing IT services for 20+ yearsAcknowledgment: All the pictures are downloaded from Internet at site www.flickr.com

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