Sourcing for Value| Sourcing for Value |
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Information Systems sourcing is a critical step in every organisations’ business plan and the right sourcing decision can deliver multiple benefits. Companies are increasingly recognising the dual benefits of 'sourcing for value and competitive advantage' alongside the traditional 'sourcing for cost savings' model. A successful sourcing strategy can position IS as a leader of business change by providing access to new technologies and thinking. Increasingly, non-core activities that do not directly contribute to an organisation's competitive positioning are outsourced to others who can deliver them more effectively. It can also deliver sustainable reductions and increased control over the IS cost base. The optimum sourcing strategy focuses on retaining core competencies and areas which deliver a competitive advantage, while strategically outsourcing other activities for which there is neither the desired capability nor the strategic need. The business challenges for Small to Medium Enterprises (SMEs) are different to those of large organisations. SMEs often lack resources and budget to invest in IS strategies to help improve competitive advantage. Many such organisations need to reduce back-office costs and improve overall operating efficiencies to maintain their competitive edge. Media coverage of outsourcing can leave the impression that such activity is the preserve of large multinationals with big budgets. However it is becoming apparent that SMEs with limited resources and budgets can actually have a more compelling business case for evaluating their current sourcing strategy to initiate cost savings, provide process efficiency and the freedom to innovate. However, SMEs often do not have the time or skills to develop that business case to evaluate what various sourcing options can bring. Statistics reveal that between 30 - 35% of sourcing initiatives fail because of lack of initial study and analysis on the part of these companies. They require assistance from external experts / consultants who can provide guidance through all stages of a sourcing strategy project, from initiation to implementation, especially in that all important sourcing assessment phase. The following sourcing options are available to organisations and we can help make the right choice: InsourcingThis is the retention of an existing function or process in-house, possibly with streamlining of the process, integration with other processes, re-engineering, replacement with a new function /process /application, (or possibly deletion of that function / process.)Shared ServicesThis is the concentration of a company’s resources to perform similar business activities normally spread across the entire organisation. The objective is to service multiple internal partners or business units with similar functional needs to achieve efficiencies and customer satisfaction.OutsourcingThis is where the company contracts with an external organisation within the country for provision of services that had previously been performed in-house by the company’s own employees.Offshore OutsourcingThis is where the company contracts with an external organisation for provision of services from a location in a different country. (Note that a company can “Offshore” without outsourcing by transferring work to a “captive” operation that it acquires in that country). |