Align Sourcing Strategically

Consultative Mindset – My mentor, Alan Weiss, asserts that consultants help to improve their client’s condition by developing conceptual agreement around objectives, measures and value. I think this is a great approach for a sourcing function to take with its “clients” which are the organization’s executive, functional and business area leadership.

As an example, consider an organization weighing a potential IT or business process outsourcing decision. The sourcing function can help their clients better understand objectives, such as cost reduction, cost avoidance, shifting resources to new service development, or growth by expansion to name just some possibilities.

It can also help their clients better define the metrics for success, like how much cost reduction over what future time frame, or how soon to new service launch. Finally, the sourcing function can help get a handle on the business value of meeting these objectives, be it hard capital savings, customer loyalty, market share and other valuable outcomes.

When the sourcing function takes a consultative approach, it helps the organization focus on what’s really important on both the strategic and functional/operational fronts. That focus makes the sourcing function much more valuable than just a procurement channel, and increases the probability of outsourcing success.

Also, as the old consulting adage says, clients know what they want, but not always what they need. A consultative sourcing function can bring cross-functional and strategic insights to the table which may not be apparent to all players.

Portfolio View – When the sourcing function takes a broader portfolio view, it increases the probability of identifying and leveraging potential synergies.

Consider the simple example of an outsourcing provider that can potentially engage with the organization for both IT and business process initiatives. The sourcing function can help to identify incremental and total cost reductions in various scenarios. Then the organization can decide whether it’s more important to reduce IT costs sooner, or perhaps IT plus business process costs to a greater degree over a longer time period.

Making the organization a more informed client is a key differentiator for the strategically aligned sourcing function.

Collective Facilitation – There’s several other critical success factors for outsourcing initiatives, including the business case and realization plan, program management and change leadership. At a minimum, the sourcing function should remain “plugged in” to these aspects of the initiative, ensuring that best-practices and lessons learned are cross-pollinated and carried forward into a repeatable and improving sourcing infrastructure.

Depending on inherent expertise and mandate, the sourcing function can often take on a larger role in the operation and management of outsourcing initiatives. Regardless of scope, the key is for this function to do as much as possible to ensure that outsourcing acquisition, operation and management lead to business value.

The strategically aligned sourcing paradigm has been improving outsourcing initiatives and relationships for many organizations. Regardless of whether your organization is considering this approach or has already adopted it, the questions are the same: What levers can your organization use to improve your next outsourcing decision, as well as those already made?

Mark Cioni is president of MV Cioni Associates. He has been helping global businesses to improve their decisions, operations and performance for over 25 years and can be reached at [email protected].