Consumerization, Innovation, And The Future Role of Sourcing and Vendor Management

Consumerization, strategic partnerships, and the demand from the business for emerging technologies are quickly becoming the key drivers of the Sourcing & Vendor Management (SVM) agenda.  In fact, without SVM making significant changes in how it does business, many SVM teams will become irrelevant.  Consider the facts:

1. Consumerization:  Our data suggests that 33% of the information workforce (those employees who use a computer to do their job), are self provisioning technologies and applications to get their work done.  What it means:   SVM is no longer needed to acquire technology and services for employees.

2. Strategic Partnerships:  Our most progressive clients are increasingly working to move their vendor relationships to outcome based strategic partnerships where the supplier is expected to delivery innovation and value creation instead of labor, technology or services.  Much of this business is being negotiated between the vendors and the business directly without the help of SVM.   What it means:   SVM is no longer needed to connect suppliers to the business.

3. Emerging Technologies:  The adoption of cloud, mobile, social and video technologies continue to outpace the overall IT market.  Much of this adoption is taking place within the business without the help or knowledge of IT and SVM.    What it means:  SVM is no longer needed to source new vendors.

I can hear the shouts of “no way” from those SVM teams that are busily executing RFPs, negotiating prices and monitoring SLAs.  But hold on and hear me out.

Remember, I said SVM is at “risk” of becoming irrelevant, not that they “are irrelevant”.   I am working on my opening remarks for Forrester’s Sourcing and Vendor Management Forum that I am hosting in November in Miami and London.  Here is my early thinking:

Governance replaces sourcing:  To really empower the business, sourcing must move away from executing sourcing events and move towards a standards setting and governance role with Enterprise Architecture.   Self provisioned and business sourced technologies introduce significant risk to the corporation.  For example, sensitive employee and customer data can end up on unsecured networks and ultimately in the hands of a criminal or competitor.  Sourcing and EA need to work to set policy and standards and then monitor and enforce through finance, legal and HR.

Win-Win replaces “We win”:  The skills needed to save another 3% on your Microsoft contract is much different than the skills required to work with a partner to drive improved customer retention rates or increased product sales.  Risk, reward, IP, co-creation and strategic sharing are capabilities that need to be obtained by the SVM pro to make win-win, outcome based partnerships work.

Leading replaces following:  SVMs continually lament the fact that they are brought in after the vendor has been selected and the PO and contract just needs to be written.  This is because the business (and the vendors for that matter) often sees SVM as a barrier to getting things done.  SVM pros must move into a thought leadership and “tell me something that I didn’t know “ role to gain the respect of business peers.  Proactive market surveillance, competitive intelligence and working with partners to develop innovation ideas will move SVM into a consultative, advisor role to the business and away from sourcing executer and SLA overseer.

I would love to hear your thoughts on this and perhaps use some of your ideas in my opening remarks. 

Thanks and looking forward to seeing you in either Miami or London.

by Paul Warren