In the 2020s, an enterprise’s speed and agility in acquiring digital capabilities will be the key determinants for its success.
But today, IT sourcing leaders are still using cost savings and cost avoidance, along with compliance and risk allocation, as their primary goals. Though critical, these operational measures fail to address how effective IT sourcing contributes to organizational transformation. In effect, there is a massive disconnect between traditional IT sourcing processes and the elements that will contribute to a company’s success in the 2020s. Where sourcing used to drive disruptive change, it is increasingly becoming the bureaucracy that most needs to change.
Think about it. IT sourcing is responsible for acquiring the digital capabilities that allow companies to move faster and with greater insights. It is responsible for the digital capabilities that will allow companies to be more well-connected with their customers. IT sourcing leaders needs to embrace this strategy: that acquiring technical capability is the thing that will have the biggest impact on an enterprise’s competitiveness, whether through revenue growth, collaboration between the company and its providers, or the value created by the provider as a result of innovating disruptive business models.
This strategy means organizations must acquire capability better, faster and smarter, so it can compete better, faster and smarter. It may include cost savings, but it may not. In fact, focusing on cost savings may be catastrophic in certain situations if it drives the wrong decision and interferes with speed or capabilities. For nearly every organization across industries, differentiation and customer experience are creating competitive edge, unless the strategy is driven by price leadership, like Walmart and Aldi – and there can only be so many Walmarts and Aldis.
To remain relevant in today’s business environment, IT sourcing leaders must take on new roles and acquire new competencies to enable and support innovation and digital transformation. These competencies include digital awareness, and a new breed of financial, risk and capability models that align with a business case for transformation instead of the more static models currently in place. While the IT sourcing role has evolved significantly in terms of contributing to business success, much work remains to be done.
Join us for SourceIT where sourcing and digital technology experts will gather to explore how to leverage emerging technologies, collaborative sourcing and digital ecosystems to increase speed and agility. Reimagining the role of sourcing may just be the most important thing you can do to prepare for your organization’s digital future.
About the author
Bill is a sourcing industry leader and active proponent of helping to create professional standards and best practices. His areas of expertise include sourcing strategies, shared services and contract negotiations. Throughout his career he has been responsible for both business development and delivery of strategic advisory services in procurement, vendor management and operational transformation.