Properly managed Sourcing gains in importance as business environments and service models evolve, company structures and supply chains become more complex, and competitive pressures mount in an increasingly global market. These factors create a genuine demand for sourcing skills within IT.
Depending on the selected Sourcing and Supplier Strategy, IT may either centralize or decentralize its sourcing. In any case, the goal is to discover the most appropriate combination of the basic sourcing criteria: service content, quality levels, availability, flexibility, and competitive price.
Net sales category 10 M€, operating locally
IT operations are based on contracts. The contract management is centralized.
In small companies, it is important to ensure that the number of suppliers is under control. Small companies must be careful in selecting suppliers that support the company’s growth and in avoiding ones that may compromise business continuity. In small companies, sourcing typically consists of one-off occasions for purchasing in which success is best ensured by acquiring assistance from external experts.
Net sales category 100 M€, decentralized operations
Supplier management is centralized and contracts are based upon a mutual set of terms and conditions. The Sourcing and Supplier Strategy provides guidelines for supplier selection.
A medium-sized company should consider centralizing purchases to a few carefully selected suppliers, thus strengthening its role as a key customer. The most productive cooperation is often established between two companies of similar size. A medium-sized company has limited possibilities to receive the best possible service from large IT service providers. On the other hand, the suppliers’ capacity and service offerings for small companies would no longer be adequate for a medium-sized company. Therefore, a medium-sized company may face challenges in finding appropriately scaled services and suitable service providers.
Net sales category 1 000 M€, operating internationally
Centralized sourcing is the key to leveraging the volume advantages of a large company. Furthermore, requirements specification, tendering and evaluation become all the more important as business needs increase.
Well-functioning partnerships with strategic key suppliers should be established and maintained, so that the suppliers are able to provide a comprehensive range of services for the entire business. Large companies may also be able to influence the development of the ecosystems they use. Organizing sourcing as a continuously operating function is essential.
Net sales category 10 000 M€, operating globally
In very large global companies, IT sourcing is an integral part of corporate-level sourcing. Therefore, it is important to define well-functioning cooperation models between sourcing and IT.
Improved management of operational models and supplier risks is the method to preserve agility. This presents a challenge for companies operating in several time zones and in a multicultural environment.
A very large company may prepare framework agreements to secure its interests and use its strong negotiating position to demand that all service providers follow them. If needed, a very large company may even create its own ecosystems and have a strong influence in their development.
Figure 4.9.1 Sourcing focus varies depending on company size.
Sourcing acquires the best services and solutions as specified in the IT strategy and IT development plan. Sourcing is well acquainted with the new opportunities offered by vendors, organizes the tendering process for purchases, negotiates terms and conditions, and supports the daily management of projects and services. When organized professionally, Sourcing enables operational efficiency of IT and helps IT to support business. Sourcing and Supplier Management covers the entire life cycle of services.