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Increase agility by selecting the right service sourcing strategy

Building an effective IT sourcing strategy

CRM is the foundation for a great customer experience. The right CRM sourcing strategy is essential for your business to be able to respond faster to customer needs, unlock new value and redefine customer engagement through remarkable digital customer experiences. Especially in the age of digitalization the global market is changing rapidly and companies have to analyze new Market trends and technology in order to sustain their competitiveness.

CRM outsourcing can provide a major advantage for a company by providing strategic advantages as improved company focus, flexibility, cost reduction, reduced time to market for solutions, access to specialized skills, and risk sharing. The question “What is the right sourcing approach?” and “What factors need to be looked at?” is not easily answered and has multiple aspects to it. Internal processes, structures and tools have to be analyzed not just from a security perspective. Additionally in today’s highly paced enterprise environment agile and web-scale innovation have to be enabled so that IT can meet evolving business requirements while enabling existing systems to continue running reliably, efficiently, and securely. A clear and well defined sourcing strategy is the key to success in a dynamic environment

Companies that need flexibility in how IT supports their business will have a hard time finding a right sourcing strategy. A clear and well defined sourcing strategy is the key to success.

What is the “right” sourcing strategy?

In the literature there are numerous definition of “sourcing”. In general sourcing can be defined as the process of delegating a business function or unit to an outside supplier. The sourcing strategy provides a guidance to identifying tasks, functions or processes that underpin the core business of an organization and support the management to optimize and improve their operating model.

Defining and implementing a sourcing strategy can have a major impact on several business functions and processes. At the end to select the right sourcing strategy companies have to find the find the right ownership (make or buy), management and governance by considering all influencing factors.

  1. Generation Outsourcing: Outsourcing of IT has evolved over the years and whilst the original ‘1st Generation’ single service provider outsource deals were mainly targeted at saving money, they were also about pushing the risk of delivery onto the external supplier. Some of key drivers for shifting the risk onto a supplier were around in-house staff; specifically skills shortages and attrition issues.

As technology has evolved, and IT services have become more critical to core business delivery, mature organizations have moved to more agile multi-sourcing models. These "2nd generation" contracts are based on selectively sourcing elements of an organizations IT services. Rather than focusing on replicating an organizations IT services delivered at lower cost, the key outcomes of this type of outsourcing model are to utilize the best fit suppliers for each IT service to enable the transformation of those IT services in order to deliver real and beneficial technology change to support business strategy.

Many second generation contracts underestimated, or simply ignored, the criticality and complexity of integration that would be required. This is one of the main differentiations between second and third generation contracts.

Third generation outsourcing aims to provide the best blend of internal capability and external multi-sourcing to ensure delivery of flexible and cost effective IT services which align with business priorities. A long term strategy should be through first of all, looking across all potential IT services and determining the right balance of choice, flexibility, commercial tension and suppliers (internal and external).

How Accenture can help to find the right sourcing strategy

Accenture offers its clients a fast and cost effective way to get a comprehensive overview on the different sourcing possibilities and supports the customer to decide on the right sourcing approach. Companies have to decide on which areas are candidates for Outsourcing, then the right sourcing approach needs to be defined. Here the key question is Make-or-Buy? This decision is not easily made. There are multi-dimensional factors which need to be considered for the decision.

Competence: The Company has to analyze if it has the competency and know-how to run the process in future in the necessary speed, efficiency and quality.

Quality: It is crucial to keep or increase the quality. It needs to be analyze if possible suppliers can deliver based on the required quality standards.

Efficiency: Will there be efficiency gains as outcome of the new structure.

Control: The Company has to analyze if by outsourcing parts of the value chain, there will be no loss of crucial management and control leavers. It can also have an impact on control over the core value chain.

Competition: New defined business process can have a big impact on the competitiveness. Benchmarks can help to understand market trends and the advantages and disadvantages the changes bring compared to the competition.

Availability: Companies have to analyze what possible solutions and suppliers are available for the outsourcing of the selected areas.

Flexibility: The impact on the flexibility has to be analyzed when deciding on make-or-buy. Including a supplier might have impact on the process flexibility.

Strategy: How relevant are the processes? Is there a risk of losing core competencies by outsourcing of those processes? The company has to assure that there are no impacts on competitiveness.

IT organizations are looking to trusted IT services providers to help reduce cost, manage complexity, maintain leading-edge skills and adopt technology innovation.

In some ways the economic logic for managed service providers is even more compelling when economic times are hard. Managed Service Provider lower upfront costs by cutting capital outlays and offer a more certain cost picture by substituting monthly payments for irregular outlays. Because Manage Service Provider share in IT project risk, they have a history of reducing the number of IT project budget overruns which plague many businesses and management teams

Finally the findings of the evaluation will need to be captured and summarized in an objective way. Only then they can serve as an input for a sound decision with which strategy the company should proceed.

Client benefits

The Accenture sourcing approach toolkit will support the customer to find the right sourcing approach by analyzing as-is processes and structures based on a 360 degree view on all influencing factors:

PROVEN APPROACH & HOLISTIC EVALUATION: Accenture ranked as a "Top 2 Outsourcer Worldwide” (IAOP, 2015).

The client can benefit from the best practices and methods Accenture has gained as Outsourcing Company.

MAKE THE RIGHT SOURCING STRATEGY CHOICE: Select best-fit solutions based on the provided framework.

REDUCE RISK: The workshops provide a comprehensive view on all influencing factors to find the right sourcing strategy and empower the customer to focus on the major questions and crucial areas.

Contact Us

For more information contact Torsten Albrecht: