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Create an IT Sourcing Strategy

Stop making ad hoc sourcing decisions.

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Contributors

  • Dr. Ron Babin, Professor, Ted Rogers School of Management
  • Daniel Bursuc, Senior Manager, Rogers Communications
  • Kal Hjouj, Consultant
  • Bret Naber, CIO, University of Northern Colorado
  • Rick Van Haeften, Director, Australian Catholic University
  • Kevin Vigil, Director of IT, Southwest Care Center
  • Donald Young, Director of IT, Northern Territory Government

Your Challenge

  • You are being asked to cut costs and outsource the delivery of IT solutions to vendors and aren’t sure where to start.
  • You are also being asked to insource the delivery of IT solutions to gain control over their quality.
  • You are seeing a decline in business stakeholder satisfaction over solutions provided by IT.
  • There has been a change in business direction and you have to re-organize what activities internal IT staff need to focus on, and what needs to be offloaded to vendors.

Our Advice

Critical Insight

  • A sourcing strategy will allow you to re-organize how IT delivers solutions and services in a manner that emphasizes business enablement.
  • A sourcing strategy will provide you and your business stakeholders with a holistic perspective on how IT delivers value to the business through an optimal mix of insourcing, co-sourcing, and outsourcing models.
  • A common approach to sourcing that is grounded in business value will decrease the propensity of shadow IT.

Impact and Result

  • Higher business satisfaction with services and solutions provided by the IT organization.
  • Better relationships with vendors and external partners.
  • Decrease in the total cost attributed to the delivery of IT services.
  • Ability to focus scarce resources on activities deemed to be critical to business success while offloading commodity activities to vendors who specialize in their delivery.

Research & Tools

Start here – read the Executive Brief

Read our concise Executive Brief to find out how creating a holistic IT sourcing strategy can help your IT organization drive more value at an optimal cost.

2. Assess IT sourcing drivers and constraints

Understand internal and external business drivers, as well as the constraints for the sourcing strategy.

3. Evaluate the current state of sourcing

Identify the current state of sourcing by assessing how IT currently delivers solutions and whether they are delivered effectively.

4. Develop a target state vision

Create a vision for the target state of sourcing that the sourcing strategy will achieve and identify the principles which will guide sourcing decisions.

5. Analyze gaps and define initiatives

Identify the initiatives which will define the sourcing strategy. These initiatives will close the gap between the current and target states of sourcing.

6. Build a roadmap

Create an execution schedule based on a prioritized list of initiatives. Secure approval for the sourcing strategy.

Guided Implementations

This guided implementation is a six call advisory process.

Call #1 - Determine mandate and scope

Make the case to garner support for the sourcing strategy project; discuss the project timeline; discuss stakeholder concerns, information needs, and desired uses of the sourcing strategy; discuss the execution and communication needs based on the identified scope.

Call #2 - Determine drivers and constraints

Identify key business drivers; discuss critical data sources; identify key external drivers; discuss critical information sources.

Call #3 - Evaluate the current state of sourcing

Discuss the complexities of the IT ecosystem with a particular focus on implications on IT sourcing; validate your approach to vendor utilization; discuss your approach to identifying sourcing models; identify the best combination of Info-Tech diagnostic programs and supplementary assessments; identify and assess the necessary data for each focus area.

Call #4 - Develop a target state vision

Define your organization’s goals for strategic sourcing; identify your organization’s criteria for sourcing model selection; review the possible target state options for each focus area; evaluate the options using the criteria; establish objectives and measures for the sourcing strategy.

Call #5 - Analyze gaps and define the initiatives

Clearly define and communicate the gaps between the current and target states of sourcing; select transition approaches; list of transition initiatives.

Call #6 - Build a roadmap

Understand how business priorities and current VM capability maturity will impact the sourcing strategy; determine the most relevant risks and their associated mitigation tactics; identify dependencies and finalize the order of execution of the initiatives.

Onsite Workshop

Discuss This Workshop

Book Your Workshop

Onsite workshops offer an easy way to accelerate your project. If you are unable to do the project yourself, and a Guided Implementation isn't enough, we offer low-cost onsite delivery of our project workshops. We take you through every phase of your project and ensure that you have a roadmap in place to complete your project successfully.

Module 1: Determine Mandate and Scope

The Purpose

  • Determine how the sourcing strategy will be utilized and what it is expected to cover. 

Key Benefits Achieved

  • The sourcing strategy project is planned and scoped to ensure that it addresses the appropriate business drivers.

Activities

Outputs

1.1

Identify and interview target audience groups. Define project mandate.

1.2

Define the scope of the sourcing strategy.

1.3

Summarize the approach in a sourcing strategy project charter and secure approval.

  • Sourcing strategy project charter
1.4

Launch effectiveness assessments.

Module 2: Assess Sourcing Drivers and Constraints

The Purpose

  • Understand the internal and external business factors that will influence the sourcing strategy.

Key Benefits Achieved

  • The sourcing strategy will have a business foundation – understanding the business factors will make the strategy relevant and contextualizes the decisions that IT must make to better enable the business.

Activities

Outputs

2.1

Identify business imperatives.

  • List of internal and external business drivers
2.2

Conduct a PESTLE analysis.

2.3

Conduct a business SWOT analysis.

2.4

Identify implications for the sourcing strategy and opportunities to innovate.

  • List of implications and opportunities to innovate
2.5

Begin building the strategy map.

  • Strategy map (draft)

Module 3: Evaluate Current State

The Purpose

  • Understand where the organization stands in terms of digital maturity in a holistic fashion.

Key Benefits Achieved

  • Produce a summary of digital maturity to benchmark against the target state in a holistic format.

Activities

Outputs

3.1

Identify IT initiatives.

3.2

Conduct an IT SWOT analysis.

3.3

Define current sourcing models.

  • Evaluation of the current state of sourcing
3.4

Review effectiveness assessments.

Module 4: Develop a Target-State Vision and Identify Initiatives

The Purpose

  • Define the goals of the sourcing strategy and the final target state that the strategy needs to achieve.

Key Benefits Achieved

  • Having the target-state vision will allow the organization to plan out the initiatives needed to achieve the target state from the current state.

Activities

Outputs

4.1

Create a list of strategic sourcing goals.

  • Strategic sourcing goals
4.2

Select sourcing criteria.

  • Sourcing criteria
4.3

Select target sourcing models.

4.4

Select transition approaches.

  • List of transition initiatives
4.5

Create a list and evaluate initiatives.

Module 5: Create a Sourcing Strategy Roadmap

The Purpose

  • Create an execution schedule based on a prioritized list of initiatives.

Key Benefits Achieved

  • Finalize the necessary transition initiatives based on the target state and the identified gaps.
  • Secure approval for the sourcing strategy.

Activities

Outputs

5.1

Prioritize initiatives.

5.2

Assess vendor management capabilities.

5.3

Identify risks and mitigation tactics.

5.4

Create the final roadmap.

  • Sourcing strategy roadmap

Search Code: 77183
Published: March 19, 2015
Last Revised: June 9, 2016