Stephanie Overby at CIO Magazine writes about “speedy sourcing” - a new approach for choosing a service provider and sealing a deal in three months or less.
I helped a client in 2002 which desperately needed to get an application outsourcing deal done in 2 months. We looked at several US, European and Indian firms, visited several for due diligence, and got best and final offers from the short listed vendors. In 2 intense months. Opened my eyes to speedy sourcing.
But 7 years later and many transactions later I have adapted my firm’s approach. Speed still matters – but speed can also just take clients down old cow paths.
Frankly, a few more wrinkles (without making the process much longer in elapsed time) add a lot more value to a client
- I recommend a “paperless’ sourcing process. Emphasize more of human touch – interviews of key staff, many more reference calls, more vendor oral presentations (customized to client scenarios, not canned ones – and ideally delivered by the outsourcer delivery not the marketing/sales team), due diligence visits (where I have the vendors simulate “a day in the life of the client’s support”), more face to face negotiation sessions and legal reviews. Cut out the written RFP. Or have a very short one. All these steps can be done quickly – with appropriate planning and logistics coordination.
- Showcase all kinds of choices to the client. If offshore, have them also look at alternatives to India – E. Europe, Philippines, rural etc. If looking at infrastructure outsourcing, look at utility and cloud providers. If application outsourcing look at SaaS and BPO options. Outsourcing is a “life event” – for 3,5, 7 years – shame on the client if their sourcing is not willing to look at coming market disruptions in that planning horizon. Shame on the sourcing adviser if it cannot quickly organize disparate vendors to participate in that discovery process. (BTW - most sourcing advisers are siloed and only know vendors in specific categories and frankly suffer from “Stockholm Syndrome”. Their narrow focus hurts many clients)
- Have the client look at life post-sourcing. What happens if the companies grows through acquisitions? What happens is the bottom falls out? Will your outsourcer truly turn your fixed costs to variable? Exit/Change control strategies. Governance. I find too many clients let their procurement folks and attorneys worry about this items during negotiations when it should be part of the learning/sourcing process.
Speed is important. Sensible even more so.