Co-creation in IT sourcing has many advantages

A sacred cow of IT is the tender: the search for a perfect match between the customer's requirements and the provider's services. Attractive lot sizes, clear interfaces and flexible pricing models are key aspects, with the aim of avoiding specific dependencies as far as possible. However, the process often takes months to complete. For fast-track projects, this is a real showstopper.

Co-creation in IT sourcing promises to remedy this, with close collaboration between customer and supplier even before the contract is signed. The aim is to reduce complexity in the sourcing process, increase transparency and speed through joint workshops and activities, and thereby maximise value for both parties.

What is co-creation?

Co-creation is not a new concept in itself. It basically means involving external parties in the idea generation and development process. Instead of developing new products and processes exclusively in-house, companies hope to gain a fresh perspective and a boost in innovation from outside. At the outset, co-creation workshops are used to define the company's requirements and share them with three to five suppliers. Representatives from the company then work with each supplier to develop detailed specifications and statements of work - especially where the solution design is not yet clear.

Besides as representatives from the supplier, experts from the customer's business units, strategic corporate functions, vendor management or purchasing will also attend the sessions. There is also a sourcing consultant who acts as facilitator. Close collaboration in the workshops helps to avoid misunderstandings and ensures that the tender documents are practical. It also ensures that all relevant information and requirements are on the table. The solution modules developed with the suppliers must be documented. In order to get a harmonised picture of the 'cultural fit' with each supplier, a debriefing should always take place after a co-creation workshop.

Agile approach to sourcing

Consolidated solution modules, which are always shared with vendors, form the basis for further development. With each co-creation iteration, the fit for the customer and therefore the solution’s maturity increases, which is why it is called an agile approach. In my estimation, co-creation is being used in the majority of RFPs. This is especially true for 1st gen outsourcing and for customers who don't know exactly what they want to outsource.

One exception: in public tenders, co-creation is used mainly in the run-up to tenders, for example in the form of market exploration, while actual tender processes are more traditional. This is because scopes as well as mandatory and optional criteria have to be defined when tender documents are sent out.

What are the benefits of co-creation sessions?

The benefits of co-creation in IT sourcing range from requirements analysis and solution identification to contract design and implementation.

The following benefits can be achieved:

• Better products based on customer requirements;
• Less administration in terms of time and cost;
• New and surprising solution ideas;
• High intrinsic motivation of all partners and cultural fit;
• Reduced complexity and thresholds between stakeholders.

For IT sourcing co-creation to be successful, a number of key success factors need to be addressed. Both sides must set and communicate clear objectives for the project. A trusting relationship between customer and supplier, with mutual appreciation and regular, open communication, is essential. Last but not least, both parties must be prepared to react flexibly to changes and make adjustments. A facilitator with sourcing experience guides the participants through the process and ensures a constructive atmosphere.

Conclusion

To be effective, co-creation sessions require participation. Thorough preparation, openness and mutual trust are a must. Only when all sides are on the same page will co-creation become a driver of innovation and the customer-service relationship with the greatest sustainable potential will emerge.