CIO — Multisourcing: Moving Beyond Outsourcing to Achieve Growth and Agility
By Linda Cohen and Allie Young
Harvard Business School Press, 2005, $35

In one sense, write Linda Cohen and Allie Young of Gartner, IT outsourcing has been a rousing success. Economists argue that it’s a major factor in corporate America’s ability to remain profitable. Companies that announce outsourcing plans routinely see their share prices rise. CEOs of such companies get paid more.

And yet, half of all outsourcing contracts signed during the past three years will fail to meet expectations, say the authors in their book Multisourcing: Moving Beyond Outsourcing to Achieve Growth and Agility. Those failures can be traced to three problems: miscommunication, governance failure and poor coordination. The book provides a step-by-step process to prevent these problems, advice that includes creating a well-aligned sourcing strategy, evaluating and selecting service providers, and methods for long-term management and governance. Multisourcing here refers not to a specific sourcing model but to a manner of setting up and managing the right sourcing model for one’s company.

Multisourcing is chock-full of helpful charts and lists, among them sample governance charts from DuPont and IndyMac Bancorp and a model outsourcing management dashboard. The "Eight Myths of Outsourcing," detailed in the first few pages, is a great weapon for any CIO being pressured into outsourcing; photocopy this page and keep it in your back pocket.

Cohen and Young overstate the case when they conclude that multisourcing is a business revolution every bit as dramatic as the industrial revolution. And the book would benefit from a more in-depth look at some of the companies highlighted. Nonetheless, it’s a practical guide to creating a foundation for sourcing success. And given the failure rates cited in this book, CIOs can use all the help they can get.