At the recent Forrester summit in London I attended most the presentations in the supplier and vendor management stream. Following the event I blogged earlier this month about the issue of getting innovation from outsourcing contracts.
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But perhaps the biggest shock to outsourcing is the onset of digitisation driven by cloud computing. I have been writing a feature about the state of outsourcing today and digitisation stands out as a major challenge for sourcing departments.
According to a Forrester survey of global sourcing executives, 65% said they are excited about the changes that digital technologies will bring, but 62% said the business lacks the skills to make the change and 68% said they don’t have the right policies and business practices.
Forrester analyst Liz Herbert said supplier management teams need a new approach if they are to harness the skills of a plethora of often little-known suppliers. She said businesses have to change the rules of engagement with suppliers by rebalancing risk and value.
Digitisation also takes power away from IT departments because the business or somebody within the business might take a liking for an app and start using it for work purposes. This is driving a trend that is seeing staff self-provisioning IT without the IT department knowing. Different departments might find certain apps useful even if they are not one approved company-wide.
Herbert said that business often sees the IT department as “the department of slow and no.”
IT and sourcing departments need to better understand the products and services staff want to use, because used correctly they can really benefit the business.
Imagine if you are a business and you sign a long term enterprise contract with a software supplier only for a similar piece of software to become available for free the following week via the cloud. And anyway there will be no stopping it with things like bring your own device programmes becoming more popular.
Forrester says sourcing departments need to change to be a department that encourages caution but does not prevent the adoption of new apps. The rules around accrediting suppliers need to be less rigid and staff need to receive new technology education.
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