Why sourcing speed is critical

Drive Your Business
Why Sourcing
Speed is Critical
How to keep pace with changing
technology and increase speed-to-value

2 Why Sourcing Speed is Critical ©2016 ThinkWGroup.com
Drive Your Business
Introduction
In today’s world of rapid
technological development and fast-
paced transformation, the year-long
RFP cycle is outdated. Companies
need the flexibility to move in
and out of sourcing agreements
rapidly to keep up with changing
demands and new capabilities.
What is rapid
sourcing?
The traditional sourcing process
can take well over a year when
accounting for strategy and analysis
work, the RFP lifecycle, transition, and
unforeseen delays. When implementing
new technologies, this amount of
time simply doesn’t make sense.
By the time a sourcing partner has been
chosen and systems are running, the
competition has already raced ahead
and taken the lead. Rapid sourcing
seeks to overcome this challenge by
reducing the time it takes to find a viable
partner and implement a new solution.
This is accomplished by streamlining
the traditional strategic sourcing model
and emphasizing speed-to-savings and
flexibility rather than other concerns.
After immediate goals have been
achieved, the organization can focus
on further optimizing the solution.
This paper will explore some of
the benefits of rapid sourcing and
help your company employ new
ways to source vendors faster.
In order to keep pace in a constantly
evolving marketplace, organizations
need a new model for sourcing IT
services, one that moves quickly
and delivers real business value.
Today’s companies need the flexibility to be able to
move in and out of sourcing agreements rapidly.

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The benefits of rapid sourcing
In a recent survey of over 2,300 CIOs,
51% said they cannot respond in a
timely manner to digital opportunities.1
Sourcing third-party IT infrastructure and
services already helps companies move
more quickly in the digital world, but
the process could be improved and
streamlined. By focusing on the flexibility
of sourcing agreements, optimizing
speed-to-savings, and moving more
quickly through the strategic sourcing
model, companies can build a more
nimble, faster moving IT infrastructure
that’s better prepared for the future.
71% of respondents to a recent survey
said the cloud increased their business
agility, and most agreed that its
greatest value was not cost savings,
but speed.2
Speed-to-value is simply
how fast a company realizes the
benefits of a new solution. Every day
of lost cost savings is cost that can’t be
recovered, and the faster a company
can capitalize on a new benefit, the
more it will save. By rapidly moving
through the vendor-sourcing process,
companies can drastically increase
the speed with which they realize
benefits and get solutions out faster.
1
Increased
speed-to-value
One goal of rapid IT sourcing should
be to avoid getting locked into the
same vendor. The flexibility to move out
of an unfavorable sourcing agreement
and find more favorable terms can be
extremely beneficial when trying to
maximize efficiency, benefits, and cost
savings. Too often, companies simply
renew contracts because they have not
properly prepared to source another
solution or because it is the easier thing
to do. Being constrained ultimately
stifles innovation and keeps companies
from achieving their business goals.
2
Greater
flexibility
Anytime an organization is implementing
a new technology or solution, it is racing
against its competitors. Whether you
are trying to be the first to capture new
market share or simply playing catch up,
it is always important to get things done
faster. Today, companies live and die by
technology. Just as Netflix disrupted the
video rental industry, another technology
is coming to disrupt yours. Organizations
that don’t move fast enough won’t be
able to compete. This makes having
a rapid IT sourcing model not just a
matter of optimization, but of survival.
3 Competition
1 https://www.gartner.com/newsroom/id/2740317
2 https://hbr.org/resources/pdfs/comm/verizon/19319_HBR_Report_Verizon_Cloud_6.pdf

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In order to increase speed when
sourcing, companies must fundamentally
change the way they approach IT.
This involves a restructuring of the IT
organization, an increased focus on
the role of sourcing in the organization,
and an increased emphasis on speed.
How to increase
speed in sourcing
Build off current
sourcing models
MOBILIZATION
The first step to any successful project
is building support and developing
initial goals. This may include meetings
with key stakeholders, creation of a
project charter, and initiation of sourcing
teams. In a rapid-sourcing model, this
process will look largely the same
with a greater emphasis on speed.
STRATEGY DEVELOPMENT
Increasing the speed of IT sourcing
doesn’t mean abandoning traditional
strategic sourcing techniques. Instead,
companies should build off old
models and look for areas to make
the process faster and more flexible.
Rapid sourcing begins with the same
four steps as traditional sourcing, but
streamlined and refocused on delivering
better speed-to-value and flexibility.
EVALUATION
IT leaders must work closely with other
members of the organization and
develop more effective strategies for
making the sourcing process faster,
more flexible, and more efficient.
During this stage, the sourcing team will
fully define goals, create measurable
metrics for success, and determine
budgets and other definite constraints. To
increase speed, it is important to make
time-to-value a key issue and define
phases for delivering value. It may be
beneficial to break the contract into
smaller segments, so that benefits can be
rolled out continually and the business
can start taking advantage almost
immediately. To speed the process, it
may also be beneficial to reuse existing
sourcing tools, plans, and checklists.
One of the key metrics for evaluation
in a rapid-sourcing strategy should
be time to market. If a vendor cannot
deliver the solution rapidly, it should be
immediately ruled out. It is also important
to make sure that all evaluations are
made in terms of business results.
Resist the tendency to measure only
technical data. Use the service’s effect
on the business to determine whether
the vendor is performing effectively.
This will help eliminate the so called
“watermelon effect,” when vendor
performance looks good on paper but
doesn’t deliver real results. In order
to ensure this doesn’t happen, it is
important for IT leaders to communicate
with the business group and create
metrics that capture the reality of
day-to-day use. Look at cost savings,
efficiency improvements, and other
similar data points to determine the
real performance of the solution.

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The RFP cycle is one of the most time-sensitive
components of a standard sourcing strategy.
NEGOTIATION
Vendors are often open to working with
their clients to create a solution that
works best for them. Be upfront about
what time frames the company needs
and find a partner that can meet them.
Work out the details of how the project
will progress, milestones, and at what
points deliverables can be expected.
Decide between old
and new vendors
Using incumbent vendors can be an
easy way to source infrastructure,
services, and solutions faster.
However, it may come at a cost
and doesn’t always lead to rapid
IT in the long run. It is important for
companies to consider both the risks
and rewards of using known providers
when compared to competitors.
CONSIDER A LIMITED
RFP PROCESS
The RFP cycle is one of the most time-
intensive components of a standard
sourcing strategy. Creating a set of
requirements, waiting for a range
of companies to submit proposals,
negotiating with several vendors, and
making a decision can take many
months. By performing a less intensive
benchmark on current providers and
taking a rough evaluation of their costs
and performance, companies can
avoid this process and create usable
solutions faster. Of course, this comes
at some cost and will likely never be
as competitive as a traditional RFP
process, but the time savings can often
more than make up for this difference.
USE THE RFP AS A
NEGOTIATION TACTIC
For projects that aren’t as time
sensitive, it still makes sense to do
an open RFP process with many
vendors submitting proposals.
Do not fall into a pattern of continually
sourcing from the same provider while
prices creep up and service standards
fall. In many cases, it can be possible
to use an open RFP as a negotiation
tactic with the incumbent provider,
offering a way to provide incentive
for the current vendor to offer more
competitive pricing or better service.

Drive Your Business
Create a bimodal
IT organization
Today’s fast paced world demands high
reliability, low cost, and innovation.
Balancing these three needs requires a
new approach to the IT organization.
By building a bimodal IT group that can
focus on the traditional goals of day-to-
day business support and differentiation,
while still being able to roll out
rapid new innovative functionality,
companies can achieve the speed
they need without sacrificing quality
and cost savings for core services.
CREATE AN
INNOVATION GROUP
This wing of the organization is focused
primarily on looking for ways the IT group
can roll out new functionality with an
acceptable level of risk. It delivers rapid
results, while not necessarily focusing
on finding the most cost-effective vendor
options or delivering perfect results.
Certain security, risk, and procurement
restrictions are not applicable to this
group, leaving them freer to work quickly.
This keeps a constant influx of new ideas
coming into the organization and prevents
the IT department from stagnating.
LONG-TERM RESULTS
The remainder of the IT organization can
be focused on increasing efficiencies,
working out more beneficial long
term contracts with vendors, and
running core services. This part of the
organization is not as focused on speed
and is more willing to go through a
traditional RFP process when attempting
to improve services or reduce costs.

Drive Your Business
One of the most important keys to
improving speed in IT sourcing is to
maintain healthy working relationships
with vendors. By building a network
of vendors that have worked with the
company in the past, understand its
needs and value your business, the IT
organization can significantly reduce the
time it takes to source a new solution.
Maintain effective
relationships with
vendors
New IT organizations
should use their resources
to find effective vendor
partners – ensuring the
business is getting the
best possible service for
the cost.
MAKE VENDOR
MANAGEMENT A PRIORITY
The new IT organization should be
focused on two roles: advising the
business and vendor management.
The IT organization shouldn’t be
spending too much time or resources on
building new systems in-house or doing
traditional technical IT work. Instead,
they should be using their resources
to find effective vendor partners, build
relationships, and ensure the business
is getting the best possible service for
cost. This means that companies must
build IT teams with a new set of skills
that can help the company negotiate
better contracts, monitor services,
and create a network of contacts.
CREATE A WIDE NETWORK
The new IT organization should have
stronger interpersonal skills with the
ability to build strong relationships
with a wide range of individuals in
vendor organizations. Modern IT
cannot operate as an island anymore;
it needs to be connected at many
points to other organizations. The IT
group should have a large Rolodex
of names across organizations to
quickly ask questions, get ideas about
the feasibility of new ideas, and roll
out solutions faster. They need to
be able to maintain relationships
with sales reps and executives to
ensure that they can quickly solve
problems and source solutions.
BUILD A LIST OF
TRUSTED VENDORS
There is no reason to work from
scratch every time the organization
needs to source something. By
building a list of trusted vendors that
have a track record of delivering
projects up to expectations and offering
competitive pricing, companies can
immediately narrow down their options
when attempting to source rapidly.
DON’T BE AFRAID TO GO
OUTSIDE OF CONTACTS
Although having a group of trusted
vendors is beneficial, it is important
not to always rely on the same ones.
Companies should always be working
to build their contact list, make
new relationships, and give other
companies a chance to offer better
service or lower cost. This allows the IT
organization to always be improving
and helps prevent cost creep.

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Common pitfalls
when rapid sourcing
Most companies know they need to
increase the speed with which they
source IT solutions. However, many
continue to make the same mistakes and
get caught with slower, less innovative
IT. It can be extremely difficult to break
old habits and develop a new IT model
that allows companies to grow. In
order to source rapidly, companies
must know what common problems to
avoid and work actively to avoid them.
Although it may seem counterintuitive,
leaving more time for contract renewals
may actually help increase the speed of
a company’s overall sourcing strategy.
Most companies vastly underestimate
the time it will take to renew a contract
with an incumbent vendor. This often
leads to overruns, unfavorable contracts,
and lack of leverage. Ultimately, this
creates an environment in which the
company is rushing to ensure that
ongoing services aren’t interrupted
and doesn’t have resources to invest
in innovation and rapid sourcing.
Falling behind on
contract renewals
To prevent these problems and
leave more time and flexibility to
work with new vendors, companies
need to leave about 18 months to
go through strategy, RFP lifecycle,
transition, and unforeseen events.
Many companies
continue to make the
same mistakes – and
get caught with slower,
less innovative IT.

Drive Your Business
Many companies struggle to find
a balance between improving the
speed-to-value of new initiatives and
ensuring that the vendor delivers high
performance, reliability and low costs.
The more rigorous sourcing techniques
of traditional IT still have their place in
a modern organization, but companies
need to understand when a more rapid,
less thorough approach is beneficial.
Balancing rapid
sourcing and
traditional sourcing
STRATEGIC SOURCING
FOR CORE SERVICES
Slower sourcing should be used for
all of the services and functionality
the company relies on daily. This
helps increase the reliability of these
services and, since they are already
in use, there is no need to rush into
a new sourcing arrangement.
RAPID SOURCING FOR
INNOVATION
Rapid sourcing is best suited to non-
critical areas of innovation. These are
new features or services that can bring
benefit to the company, but don’t need
to be reliable. By using a faster sourcing
method here, companies put themselves
at very little risk with the potential for
great benefit. After the new service has
proven itself valuable, it can be moved
over to a more reliable or cost-effective
platform at a more strategic pace.
Although it may seem logical to build an
IT team rich in technical skills, able to
put together infrastructure, and perform
other IT specific tasks, today’s optimal
organization isn’t focused on that
skillset. Although those individuals will
always have some place in IT, today’s
most forward thinking companies are
building teams that have traditional
business skills with a technology
underpinning. Too many companies
don’t devote enough resources to the
people who will be managing vendor
relationships. This leads to drawn
out RFP cycles, worse contracts, and
slower sourcing. By building teams
with skills where they are most needed,
companies can significantly reduce
sourcing time and get better results.
Building an
inefficient IT team
Too many companies don’t devote enough resources to
the people who will be managing vendor relationships.

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Conclusions
Sourcing has become one of the most
critical functions of the IT organization.
When sourcing was a secondary
function, a single, slow strategic
approach may have made sense.
However, now IT leaders must work
to ensure the company can both move
quickly to capitalize on new innovations
and move strategically to reduce
sourcing costs and improve service.
This bimodal approach necessitates a
larger portion of the team devoted to
vendor management with new skills
that allow them to be effective in an
interpersonal and business-oriented
role. Rapid implementation of new
ideas and technologies can mean the
difference between great success and
obsolescence. IT leaders must strive to
ensure their organization is ready to act
quickly when opportunity presents itself.
For more information on how WGroup
can help your IT team work faster,
better and smarter, visit us online at
thinkwgroup.com.

Founded in 2004, WGroup is a technology management consulting firm that
provides Strategy, Management and Execution Services to optimize business
performance, minimize cost and create value. Our consultants have years of
experience both as industry executives and trusted advisors to help clients think
through complicated and pressing challenges to drive their business forward.
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Radnor, PA 19087
610-854-2700
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