After a little more than 20 years in the IT industry, representing suppliers, customer and consultancy firms in various functions, it is clear that ‘expectations’ are probably the most failed and under-estimated aspect in IT. In particular, the expectations regarding an IT sourcing strategy. Suppliers believe that every customer has one (and try to discover its contents), Customers believe they have one (but are somehow often unable to deliver anything more than one or two slides mistaking a vision for a strategy) and consultants desperately try to create and sell one. 

To be clear, we are talking about a plan regarding which IT services fit to which business needs and how/by whom those services are to be delivered (insource, outsource, cloud, etc.), preferably with a long term time-line, some level of reasoning (preferably even a business case) and clearly defined services/products. The key word in the preceding sentence being ‘plan’ and this should not be forgotten. It may even be preferable to use one of the synonyms of strategy such as ‘master plan’, ‘blueprint’ or ‘plan of action’ to ensure that the purpose of an IT sourcing strategy is clear. It is the bridge between your vision and realizing your goals.

Many companies rely on strategic sourcing, which is a procurement process aspiring to lowest total cost, ignoring the need for an IT sourcing strategy but unless you have a strategy, the procurement department will not know which services they should bring to the market place to source. Please don’t look to your procurement department to solely develop the IT sourcing strategy.

Starting with the suppliers/vendors, there is often an expectation that the customer has created an extensive strategy. The supplier will try to discover who is considered to be the competition for both its own scope of service and those in other areas. Suppliers are seldom content with what they have been awarded and their annual goals typically expect growth of scope by pushing out other suppliers or expanding their services to those being internally delivered. This shouldn’t be news to anyone (after all, a supplier’s business needs to grow) and some customers that I have worked with actually had sourcing strategies that contained the information that suppliers desperately sought after. However, the majority of customers do not have this level of detail and many services/products fall on the borderlines between the various allocations (e.g. workplace, infrastructure, network, application, etc.). Suppliers are also too often driven by commercial goals to be willing to accept their own weaknesses in some areas, thereby causing overall customer dissatisfaction by venturing beyond their strengths. 

My advice to the supplier is to focus on understanding the customer’s expectations. After all, the customer chose you for a reason and the focus should be to excel in this area before expanding, if at all. If expansion remains a goal, be honest. Do not push the customer to disclose their strategy but offer your own strategy that clearly shows your strengths and weaknesses (note to any suppliers reading this….no matter how big you are, you are never the best at everything). It’s also important to remember that it is very unlikely that any customer/company will sole source all of its IT to any supplier, so deliver your strategy including how you will interface with others! Be a team player rather than a silo.

Customers/companies are clearly the source of any IT sourcing strategy, but most become too splintered in their attempts to satisfy the multitude of IT needs of the business that a cohesive strategy is difficult to define, let alone deliver. Due to this, most multi-nationals develop their sourcing strategy at the C-level with the help of consultants. Whilst not always a bad starting point, this often results in a vision rather than a strategy. It’s vital in such cases that such a strategy is developed with those needed to deliver it. Procurement (if outsourcing is involved), legal and finance departments are typically the parties most think of, but it is key to bring into play those who will really be delivering the Services and managing the supplier(s) as early as possible. The Service Management/Operations department, Security office and hopefully (any large-scale company needs one) the Commercial & Contract Management team are crucial to making a strategy work. The latter should not be confused with procurement whose primary focus is more often on pre-award negotiations and vendor management (managing the relationship with the vendor) rather than post-award management of deliverable and obligations and performance management, potentially combined with contract evolution. 

So, please remember to include the delivery teams and be prepared to continually evolve the strategy. Maintaining a strategy costs time and effort but is the only way to ensure that everyone concerned has clarity on the goals to be achieved. Nothing is more irritating than negotiation major changes with suppliers (often taking months of preparation) to find that the strategic goals changed without being informed.

Finally, the consultants responsible for advising the customer and in some cases, the supplier. In almost every engagement I have been involved in, external consultants tend to drive and produce the strategy. A good consultant clearly has market experience and knows what others are doing. However, it is no longer enough (or even the key objective) to be better than the competition, you have to be different! You also need to retain the link to those needing to deliver the goals of the strategy. Consultants are experts in writing words that can have many interpretations (probably the closest profession to a politician) and ultimately have no responsibility in delivering against the strategy. So, please, remember that a consultant is to deliver advice, but the decision must be made by the customer and the language being used needs to resonate with the customer and be clear to those responsible for making IT happen.

Why do I write this, somewhat lengthy, experience of IT sourcing strategies? The answer is simple. In a time when business demands are more volatile than ever and IT marketplace opportunities erupt daily with new types of cloud services, AI, robotics, etc., it is important for all parties involved to understand where they stand and what the opportunities are. People need time to make change and clear expectations on what the goal of the change is are more important than ever before.