Reinvent Your IT Sourcing Model to Tackle Tomorrow’s Challenges
Published November 21, 2024
- Sourcing & Services Optimization
A Complex Environment
Why Strategic IT Sourcing Matters
Facing rising costs, talent shortages, and rapid technological shifts, companies must rethink IT sourcing beyond traditional cost-cutting measures. Instead, a comprehensive model offers greater flexibility, improved performance, and enhanced risk management. In fact, 75% of companies report that enhanced IT sourcing directly supports business innovation, underscoring the value of a modernized approach.
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30% – our research shows that organizations can achieve up to 30% cost savings
Recognizing Warning Signs in IT Sourcing
Outdated sourcing models reveal critical warning signs, such as rising costs, delayed adoption of emerging technologies, and misaligned goals. These signals often lead to inefficiencies that limit business potential and increase operational risks. Recognizing the gaps in your sourcing model is the first step toward meaningful change. Addressing these gaps positions companies to meet future challenges effectively.
Key Strategies for Transformative IT Sourcing
Our experience highlights ten actionable strategies that form the foundation of effective IT sourcing transformation. These include:
- Cost Optimization and Resilience: Building a cost-optimization program can lead to double-digit savings, unveiling hidden costs within IT supply chains and fostering financial resilience.
- Business Alignment and Demand Management: Developing proactive sourcing that aligns with business priorities, avoids reactionary spending, and ensures that resources directly support strategic goals.
- Agility in Technology Adoption: Updating legacy contracts and enabling flexibility allow organizations to quickly adopt new technologies, essential for staying competitive.
- Enhanced Vendor Relationships: Strong governance and accountability measures with suppliers ensure that partnerships align with company goals, maximizing value from relationships.
- Customer and End-User Focus: Transitioning from traditional SLA metrics to experience-focused KPIs, such as Net Promoter Scores (NPS), allows organizations to better gauge customer satisfaction, ensuring sourcing efforts translate into improved service delivery.
The remaining strategies focus on transforming IT into a business enabler, moving away from a cost-only perspective to a driver of customer satisfaction and operational flexibility. Organizations that adopt these practices report a 33% improvement in project ROI, on average, proving the business case for holistic IT sourcing.
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Evolving Your IT Sourcing Model – Strategies for Transformative ChangeCase Study: Driving Transformative Value at a Global Energy Leader
One of our clients, a global energy company, partnered with Wavestone to overhaul its digital skills sourcing. Through a series of Agile and Lean workshops, the company achieved a 33% rate reduction across suppliers while tripling engagement from service providers. This new approach empowered them to quickly adapt to industry changes and maintain competitiveness in an evolving market.
This involved leveraging Wavestone’s role as independent consultants to coordinate with various suppliers and facilitate joint workshops, collaborating to develop the RFI and RFP. Additionally, it required working with sensitive procurement data to design a reusable commercial model for evaluating vendor proposals. This model is now helping the client to:
- Accurately assess the value offered by different suppliers
- Reach transparent, objective sourcing decisions
- Achieve stakeholder consensus at all levels
Focused on Collaboration
We collaborated with the client to develop a flexible, modular contract framework. This approach enables the company to work with a select number of suppliers and quickly access new skills with minimal need for renegotiation. As a result, procurement productivity has improved, and the pace of developing new digital services has accelerated, including leveraging more innovative methods to continually integrate emerging technologies. This approach is also delivering substantial commercial benefits, including enhanced sourcing speed and flexibility and notably reduced costs, like:
- A 33% reduction in supplier rates
- $20 million+ opportunity based on projected work
- Supplier response rates three times faster
- A streamlined micro-tendering process that cuts supplier response times for new work from one month to ten days
How Wavestone Supports Your Sourcing Transformation
We collaborate with clients at every sourcing stage, from strategy to execution and management. By leveraging data-driven insights and cross-functional expertise, we help organizations build adaptable sourcing models that drive measurable results.
For instance, one client achieved a 40% faster project turnaround with our guidance, streamlining processes and reducing redundancies. Our team’s emphasis on strategic alignment and innovative solutions enables businesses to capture immediate and lasting benefits.
An evolved IT sourcing model is not just an advantage—it’s essential. By tackling the ten outlined warning signs and implementing these targeted strategies, organizations can transform their IT sourcing function into a core component of sustainable business growth.
Key Outcomes:
- Up to 30% cost savings with modernized sourcing strategies
- 33% improvement in project ROI among organizations embracing comprehensive IT sourcing
- 75% of companies recognize enhanced IT sourcing as a direct contributor to innovation
- 40% faster project completion with streamlined sourcing approaches
How will we help your organization?
Wavestone provides expert support at every stage of the sourcing lifecycle. In the strategy phase, we assess the effectiveness and value of the current supply chain, comparing it to potential gains from alternative sources. This analysis helps us create a roadmap for change, including initial business cases.
During implementation, we deploy skilled resources, tools, and methodologies to select an optimal supplier landscape that aligns with business strategy and adds value, such as improved service levels. Wavestone assists clients in developing and implementing top-tier contracts aimed at maximizing benefits. We support clients through negotiation and due diligence, guiding them into live operation to ensure anticipated business returns are achieved.
After the deal is complete, we stay engaged to help the client and supplier focus on delivering benefits in a transparent and self-sustaining way. If issues arise, our mediation and remedial approaches help prevent costly service disruptions or disputes.