Market & Sourcing
Market and trends in IT sourcing
by Alexander Freimark
As part of the IT Sourcing Study 2022, the research company Lünendonk spoke with Dr Jakob Rehaeuser from Metrics about the current trends in IT sourcing - from future-oriented sourcing strategies to cloud.
IT sourcing - in really disruptive times
How should CIOs develop a future-oriented sourcing strategy?
As always, the IT strategy should be derived from the business strategy, and this also applies to KPIs for managing IT. Then comes the sourcing strategy, where flexibility is currently of primary importance. Managed services form a good foundation, but flexibility in capacity through elasticity and scalability is crucial if you want to react quickly to changes in business and IT strategy ….. and we have seen in the past two years how quickly a stable situation can change.
Dr Jakob Rehaeuser, Practice Lead IT Sourcing at Metrics
Why should business units be involved in IT sourcing?
Business units already account for a significant part of IT expenditure. Therefore, IT organisations should not sit on the sidelines, but quickly close existing gaps in the relationship. Otherwise, IT and sourcing strategies will diverge. This is reflected in the trend of 'citizen developers' with an increasing use of low-code and no-code tools.
What impact do you expect on IT sourcing consulting?
I am pretty sure increasing complexity in sourcing will continue to drive demand for consultants. After all, you don't just pull a sustainable multi-provider strategy for managed services, cloud and staffing services out of your hat. Organisations need a multi-layered sourcing concept with extensive vendor management alignment to orchestrate services and providers - ideally technology-agnostic. One facet, for example, is the management of contracts and reporting, including renegotiations and escalations. And of course, business units also need IT sourcing competence, especially in an economically challenging environment.
In which situations can benchmarking help in IT sourcing?
While cost benchmarks target internal IT, market price benchmarks are applied in all phases of the sourcing lifecycle. This starts with make-or-buy analyses and simulations, extends to the comparison of offers, service levels as well as current market prices in negotiations and includes renegotiations at the end of a contract term. It is about using one's own key figures and comparing them with values from other organisations to determine one's location and meaningful goals in a non-transparent market.
How should one tackle the planning and allocating of cloud costs?
Cloud computing is a double-edged sword: It makes IT faster, but quick decisions can also backfire. The speed and flexibility of the Cloud have come at a price, and this was not really communicated at the beginning: The promise of cost reductions was willingly believed. And because the Cloud was often a strategic decision, some business cases were also not hard-calculated or followed up. This also includes projects of business units which were commissioned alongside the IT. Therefore, the old motto from the golden outsourcing era still applies in the Cloud: 'Think of the end at the beginning'.