Best Practices for Streamlining Sourcing Life-Cycle Governance

Moving from first to second generation outsourcing capabilities is a long-term process for many firms, requiring a much stronger governance role from sourcing and vendor management professionals. In order to successfully invest in governance, sourcing professionals must first identify and understand the contributions and requirements of stakeholders throughout the sourcing life cycle. Taking a strong approach to governance and process oversight will promote an agile and high quality sourcing process, maximizing benefits from existing vendor relationships.

As SVM professionals prepare to take on broader service profiles and more complex technology solutions, collaboration across business stakeholders becomes much more complex. Today, empowered employees across business units are beginning to source solutions on their own, making technology decisions without the supervision of the IT department. As more and more business leaders begin to make technology investments, IT departments are faced with the task of defining, selecting, and deploying solutions that satisfy needs across the organization — a challenge that can prove to be a key differentiator for sourcing and vendor management organizations.

In order for sourcing organizations to mature, they must understand both the complexity of the sourcing process and the intricacy of each step of the life cycle. Most importantly, SVM professionals must get to know the contributors and stakeholders in their firm and use this knowledge to map various activities in the sourcing process. Stakeholders, which differ throughout the stages of the life cycle, include IT executives for strategy, infrastructure and operations teams to support execution, procurement organizations to support sourcing life cycle activities, and the legal and HR departments to adhere to corporate governance.

Just as stakeholders vary throughout the life cycle, so do levels of engagement. While CIOs and IT executives are accountable at critical points in the sourcing process, other roles throughout the IT department should also be responsible for continuous participation. SVM professionals are usually involved throughout the entire lifecycle, overseeing each stage to ensure clear, concise, and structured communication. In order to successfully coordinate activities throughout the sourcing process, SVM professionals should follow several best practices to clarify the role of stakeholders:

• Build a process model describing their sourcing life cycle. Building a firm-specific sourcing model helps SVM professionals take the first critical step in identifying key stakeholders. For example, Forrester’s sourcing life cycle defines the reoccurring process of strategizing, contracting, and executing on IT investments. Many SVM professionals in leading companies are already building their own models, describing their firms specific life cycle and the activities needed for more focused communication.

• Use a RACI matrix to identify the role and their responsibilities. A RACI matrix can help SVM professionals take the next step towards understanding the responsibility of various stakeholders in each step of the sourcing cycle. This tool goes beyond the activities of the process model by aiding in visualization of the relations between various stakeholders, creating a better understanding of the communication and collaboration needed. Using a matrix will help SVM professionals map key sourcing tasks to stakeholders according to their involvement.

• Understand the different stages for the different services. Because each service delivered to IT clients — including desktop service, server hosting, and application development services — needs to be managed at different life-cycle stages, SVM professionals should track parallelism and manage collaboration. This will allow more focused communication between stakeholders, reducing the time and effort necessary for successful collaboration. For example, during the strategy and contracting phase, defining clear responsibilities through more effective communication will allow for more successful meetings and faster decision making.

Sourcing and vendor management professionals must take a more proactive approach to managing the sourcing cycle in order to become the focal point for sourcing questions, moving their role closer to a strategic oversight function. In order for this shift to take place, SVM professionals must invest in process by defining their individual sourcing life cycle and constantly seeking to improve communication between stakeholders involved in the process. Taking small steps to decrease the internal management costs behind sourcing decisions and maximize the value of sourcing investments can yield real results in the sourcing process. Facilitating the necessary level of collaboration between stakeholders for service requests, escalations and end-of-service requires strong governance and a continuous adaption of the sourcing lifecycle — but can put SVM professionals at the center of client-oriented, value-driven service delivery.

Lutz Peichert is a vice president & principal analyst serving Sourcing & Vendor Management Professionals at Forrest Research.