Market & Sourcing
Sourcing Support – transparency matters
by Timo Kopp
In IT sourcing, consultants practise different relationship models - sometimes on the side of the user company, sometimes between the client and the IT provider. We show what matters in which phases.
IT sourcing and especially contracting with external providers is becoming an important success factor for IT organisations. In recent years, projects have tended to become more frequent and more small-scale. Many companies, however, find it difficult to make the optimal IT sourcing decisions on their own - as a result, the sourcing consultant scene is large and vibrant.
IT sourcing consultants usually work in two different set-ups: They advise a single client (1:1), mostly a company, before and in the process of concluding a contract with an IT service provider. Or they regulate in the review and improvement of an existing contract between a user company and an IT provider (1:1:1). Both constellations must not be mixed.
Sourcing advisor for make-or-buy decisions
As a consultant, Metrics plays two different roles: Initially, we support user companies in analysing whether they are prepared for the future, whether they should handle the requirements of their business units with their own IT and when it is more economical to have parts of the IT operated by external service providers (make or buy). Once the client has decided that he wants to outsource IT services, we help him select the best provider, negotiate the contract in his favour and set up the retained organisation. Up to this point, the relationship is clear: one company, one sourcing consultant (1:1). This model is usually found in the early phases of the sourcing lifecycle, when the strategy is defined, RfPs are developed or offers are compared.
- The primary tasks of the sourcing consultant in this phase are:
- Support in the sourcing strategy
- Make or buy decisions
- Support in all phases of tender management, including:
- Request for proposals from outsourcing service providers
- Comparison and evaluation of the offers received
- Selection of the preferred outsourcing service provider
- Demand management and portfolio management
- Design of IT services (costs, service catalogue, SLAs, KPIs...)
- Planning and setting up the retained organisation
Sourcing support during outsourcing contracts
If the contract concluded is then examined and adjusted in subsequent years to ensure that it is in line with market practice, the constellation develops into a triangular relationship of client, sourcing consultant and IT provider. The consultant works together with the client and IT provider when, for example, contracts are to be reviewed in the middle of their term or are due for renewal.
In this phase, the tasks include:
- Determining current market prices for contracted services
- Checking billing and pricing models
- Reviewing IT services in terms of design, flexibility and pricing model
- Review of SLAs and comparison with the market
- Mediation in case of tensions - neutral authority in contract management
- Improvement of communication between provider and company
As a neutral authority between IT service providers and customers, we always strive for a balanced relationship. The aim is to define prices, services and structures openly and transparently for the contractual partners in order to deepen mutual trust. If one side does not play with open cards in this phase, massive distortions can occur between the parties, as a result of which the value of the agreement decreases for all sides. This also includes arguing on jointly agreed and credible figures.