June 2010
Multi-Sourcing – the progressive IT coalition of the future?
As we enter a new era in British politics, and our leadership vow to "transform our country for the better", we bring you an insight into how the IT industry is making coalition IT work for them.
In the last year multisourcing has taken precedence over megadeals awarded to single providers. The best example of this was BP’s 5 year £1.5bn deal with TCS, Infosys, WIPRO, IBM and Accenture. This was a major step for BP which had previously had 40 outsourcing suppliers.
The benefits of multisourcing are largely based on the approach to retaining core skills in-house and outsourcing commodity services to gain competitive advantage while retaining control over the end game. It also allows organisations to create partnerships with best of breed IT Providers.
However, is coalition IT the right way forward?
"Taking the best of each parties policies"
Multisourcing can be used to create an IT service that makes the most of all the parties involved, taking the best policies of each of them. This can provide a transformation that is more far-reaching than one IT provider can deliver on their own. It does, however have it’s downside – the complexity of working with multiple partners can drive inefficiency and a lack of agility. Therefore multi-sourcing works best when there is a large enough scale of IT estate that can truly benefit from it's upsides.
"Keeping the policies honest"
Spreading the workload over a number of parties has the added advantage of highlighting inconsistencies in approach and value for money that would not otherwise be the case with one IT provider. The challenge to this is ensuring that you retain good people to manage this and that they have greater involvement in the operational service and project delivery.
"Choosing the right partners is paramount to success"
As our parties have worked together it has become increasingly clear to us that, though there are differences, there is also common ground. Although much is written by Gartner and the IT press on best practice for multisourcing, the key underlining principles are co-operation and leadership. Therefore choosing partners that you can work with and who can work with each other is paramount. Deciding who will take the leadership role at a macro and micro level is also key.
Leadership roles at an operational level should be agreed across IT partners (giving them a ‘mandate to govern’) but strategy and governance should always be lead in-house. So, multisourcing – not for the faint hearted, but it could transform our IT future for the better – watch this space!
How Grange have helped customers to succeed with multi-sourcing…
Grange have helped our customers with the challenges of multisourcing to achieve real business benefit as follows:
Automotive industry – Grange moved their customer to a structured multi-sourced model. The Provider of the business focused service management and helpdesk, led the service transformation providing the users with a more streamlined and efficient service.
Food Industry – Grange advised the customer on how to improve their supplier management in a multi-sourced environment. This involved developing a single 'customer driven' SLA to replace multiple individual supplier SLAs.
IT industry update
Intellect predict 'a return to growth, albeit slight, over the next 12 months' for the UK IT industry. The IT outsourcing industry is reporting increased activity in the first part of 2010 although mainly in IT infrastructure outsourcing as companies continue to try to cut costs.
Software as a service (SaaS) providers continue to show strong growth with Success Factors and Concur both showing double digit growth. We are also seeing stronger merger activity in both this area (Allocate’s purchase of Dynamic Change and the Salesforce purchase of Jigsaw) and in the whole IT sector. Regent reported 262 deals across Europe in April, the highest since September 2008.
The election result and formation of the coalition is interesting for IT spend by central government. Both parties are well aligned on government IT with agreement on scrapping ID cards, the Interception Modernisation Programme and Contact Point. They will also be cutting the NHS IT programme.