changing-infrastructure-landscape
Outsourcing

Chris King (Global) - Changing Infrastructure Landscape: The Move Towards Agile Multi-sourcing

It's clear that the IT outsourcing and technology services industries are currently undergoing radical changes. There is a ‘perfect storm' developing, with the trend towards multi-sourcing and distributed services, the growth in cloud adoption and pay-as-you-go utility services, and the redefinition of the CIO role in a business context. All these factors have converged to present businesses with more choice and control over how they procure and deploy IT services.

In outsourcing terms, it is not one, but a number of intersecting cultural, commercial and technological factors that are not so much driving the move from megadeals, as influencing the move towards smaller, shorter contracts.

Firstly, there is a significant shift to online commerce that has massively increased competition in many markets. This has made established IT sourcing models increasingly obsolete. Secondly, many procurement departments harbour negative views of ‘lock-in', and a perceived lack of value and innovation associated with single source megadeals. There is a parallel perception that one supplier cannot be the best at everything and that an overall higher quality of service can be obtained from separate providers. Technologies such as broadband, smartphones, iPads and video-conferencing are leading to a wider, more complex network of service providers.

Furthermore, the use of cloud providers enables businesses to procure IT services without going through the IT department. In some cases, this can result in procuring more efficient services than the IT department could deliver. And finally, there is, of course, the continuing and relentless drive to more cost effective services without sacrificing quality.

Governance: the key to multi-sourcing success

There is one emerging truth about the trend towards smaller and more numerous IT deals that is fast becoming constant - the importance of strong and coherent governance. A multi-sourced IT environment lives or dies by the strength of the governance. Whether that is contractual, commercial or service governance, it needs to be thoroughly defined in scope, well managed through effective service and operational level agreements, as well as strongly supported from executive level down to both the client and service provider organisations.

So how can businesses benefit from next-generation sourcing and governance models? Strong governance and a properly aligned service provision model will ensure that the "one throat to choke" or "one back to pat" ethos of the megadeal years still prevails, while the more agile multi-sourced environment can ensure a steady supply of ‘best of breed' IT service providers targeted at delivering according to your business priorities on that day.

The future of outsourcing

Undoubtedly, we will see the continued emergence of shorter-term, lower value deals. This will involve aggregated services integrated into the IT framework, which will enable businesses to move to ‘pay as they go' and ‘as a service' solutions. We will also witness the rise of new entrant service providers as more niche services emerge during this time of hyper-competition. However, not all will prosper. There will be more volatility in the market, but not the IT service, as providers will be switched on and off with ease, with less time to establish trust and familiarisation.

What is clear is that the future will lie in providing the right balance between delivering on service levels and customer collaboration.

Chris King is the Global Service Integration Lead for Infrastructure Services at Capgemini

 

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