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Outsource magazine: thought-leadership and outsourcing strategy | October 24, 2014

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Bringing innovation to sourcing for smarter business performance

Bringing innovation to sourcing for smarter business performance
Outsource Magazine

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

  • “INNOVATION comes top in all our client surveys and engagements, and needs a partnersourcing approach”  @AlsbridgeEurope
  • “Without TRUST there can be no genuine partnership. Not blind trust of course; TRUST supported by DUE DILIGENCE” @outsourcemag
  • ‏”COLLABORATION. In it together. Mutuality of needs & expectations” @frjennings
  • “We advocate ‘source agnostic’ rather than ‘cloud first’. Keywords: FREEDOM and FLEXIBLITY” @Dale_Vile

#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:

partnersourcing word cloud 1

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:

Sourcing Twitter key words graphic 1

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.

What do you think?  What does sourcing mean to you and what innovations do you think it can benefit from?  Please do continue the discussion with me @tadmorgans or via uk.linkedin.com/in/tonymorganuk


About the AuthorTony Morgan 200

Tony Morgan is Chief Innovation Officer, Strategic Outsourcing, IBM UK & Ireland.

  • tectl

    Spot on but a word of caution can be gleaned from gardeners and fertilizer. Adding more on top of existing fertilizer will not produce a better crop. Innovation that is put on top of existing inefficiencies result in under utilization and compounded chaos. Business processes require periodic ongoing optimization in order to full reap the bounties from innovation.

  • Rob Peters

    Totally agree with the importance of “Trust”. In this hyper-connected and transparent world of social business, identifying and collaborating with outsourcing firms that have a track-record of earning Relationship Capital (RC) by keeping their commitments and building positive perceptions is becoming more tangible. High performing and innovative outsourcing partners want more than a client’s revenue. They want client partners that will reference their good work and reward them with RC. A high quality relationship is more sustainable than just meeting an SLA.



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