Engaging with the Market to Leverage your Buying Power

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IT Sourcing - managing the risks for success. 1. Strategic Sourcing – what does it mean? 2. What factors influence the decision-making process? 3. Assessing different models for streamlining buying and effectively structuring procurement 4. Effectively managing risk while delivering business value and constructing back-to-back deals 5. Expanding the sourcing options to include offshore in-house.

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Engaging with the Market to Leverage your Buying Power Walter Adamson Digital Investor Pty Ltd [email_address] Advanced IT Contract Management and Negotiation Conference, November 2003

Contents ,[object Object],[object Object],[object Object],[object Object],[object Object]

Strategic sourcing – what does it mean? ,[object Object],[object Object],[object Object],[object Object],1.1

Strategic sourcing requires a new question “ What is the best source for every IT service” NOT “What do I have in IT that seems appropriate for outsourcing” 1.2 Gartner - 30% of companies are unprepared

Tactical sourcing is inefficient and often ineffective ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],1.3

A common cause for current disappointments 1.4 The single most common mistake is that organisations did not identify, and then build and retain, the strategic, management and complementary operational skills needed to create and capture the potential benefits of outsourcing. Walter Adamson

Future strategic sourcing will be more complex ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],1.5

Factors influencing decision-making ,[object Object],[object Object],[object Object],[object Object],2.1

Business-level decision ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],2.2

New organisational models ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],2.3

New organisational models - 2 ,[object Object],2.4 Non-mission-critical Mission-Critical Out-task – Type 2 In-house CORE Contract Sourcing Out-task – Type 1 CONTENT Sourcing and Implementation Strategy

Extended options – going global ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],2.5

Assessing different models for structuring procurement 3.1 The funnel is often the other way around! Management Benefits ROI Contract

Strategic sourcing relationships 3.2 Fee-for-service Contract/Relationship Risk/Gain Sharing (new vision) Transformation (market breakthrough) (value-chain reengineering) Effectiveness (process integration) (service) Efficiency (cost) VALUE REPEAT what they know RE-APPLY what they know RE-INVENT what they know Need more flexibility to cater for uncertainty

Multiple service provider 3.3 (new vision) Transformation (market breakthrough) (value-chain reengineering) Effectiveness (process integration) (service) Efficiency (cost) VALUE Traditional Contractual Relationships Teaming & Preferential Relationships Advisory and Trusted Relationships Boutique Fit for Purpose (No prior contract) Relationship Best of Breed (Panel Contract) Long-term Competitive Contract Fee-for-service Contract/Relationship Risk/Gain Sharing

Contracts reflect relationships 3.4 ,[object Object],[object Object],[object Object],[object Object]

Managing Risk and Back-to-Back Contract Construction Client Service Provider Contract Terms and SLAs 4.1

A recent lesson in back to back # ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],4.2

Expanding Sourcing Options to include Inhouse-Offshore ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],5.1

Inhouse offshore risks ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],5.2

Resources for IHOS ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],5.3

Contact: Walter Adamson [email_address] www.digitalinvestor.com.au +61 403 345 632 5/45 William St, Melbourne 3000

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Engaging with the Market to Leverage your Buying Power

1. Engaging with the Market to Leverage your Buying Power Walter Adamson Digital Investor Pty Ltd [email_address] Advanced IT Contract Management and Negotiation Conference, November 2003

4. Strategic sourcing requires a new question “ What is the best source for every IT service” NOT “What do I have in IT that seems appropriate for outsourcing” 1.2 Gartner - 30% of companies are unprepared

6. A common cause for current disappointments 1.4 The single most common mistake is that organisations did not identify, and then build and retain, the strategic, management and complementary operational skills needed to create and capture the potential benefits of outsourcing. Walter Adamson

10.

11.

12.

13. Assessing different models for structuring procurement 3.1 The funnel is often the other way around! Management Benefits ROI Contract

14. Strategic sourcing relationships 3.2 Fee-for-service Contract/Relationship Risk/Gain Sharing (new vision) Transformation (market breakthrough) (value-chain reengineering) Effectiveness (process integration) (service) Efficiency (cost) VALUE REPEAT what they know RE-APPLY what they know RE-INVENT what they know Need more flexibility to cater for uncertainty

15. Multiple service provider 3.3 (new vision) Transformation (market breakthrough) (value-chain reengineering) Effectiveness (process integration) (service) Efficiency (cost) VALUE Traditional Contractual Relationships Teaming & Preferential Relationships Advisory and Trusted Relationships Boutique Fit for Purpose (No prior contract) Relationship Best of Breed (Panel Contract) Long-term Competitive Contract Fee-for-service Contract/Relationship Risk/Gain Sharing

16.

17. Managing Risk and Back-to-Back Contract Construction Client Service Provider Contract Terms and SLAs 4.1

18.

19.

20.

21.

22. Contact: Walter Adamson [email_address] www.digitalinvestor.com.au +61 403 345 632 5/45 William St, Melbourne 3000

Engaging with the Market to Leverage your Buying Power

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