The firm warns that outsourcing has become such an integral part
of successful business practice that many organisations are
embarking on outsourcing programmes almost without thinking.
However, according to Gartner vice president Linda Cohen and
Allie Young, author of Gartner's new book Multisourcing: Moving
Beyond Outsourcing to Achieve Growth and Agility, firms would
be better to avoid compulsive outsourcing.
"Chaotic and compulsive outsourcing creates as many challenges
as it solves. Furthermore, in many cases, the problems are caused
by the immaturity of the organisation's sourcing practices rather
than being the fault of the service provider," said Cohen.
"Organisations learn too late that managing external services
requires vastly different competencies than managing the same,
internally provided services."
Gartner lists eight outsourcing myths that are undermining
outsourcing success.
- The myth of sourcing independence: This is the
idea that sourcing decisions can be made entirely independent of
business strategy. As a result, organisations create outsourcing
relationships that are incompatible with the business results
expected.
- The myth of service autonomy: A similar myth
is that services are autonomous-and one sourcing relationship has
nothing to do with another. According to Cohen, in today's world,
"all of a company's business processes and services are
interrelated. We've created an operating environment where
autonomous services simply don't exist."
- The myth of economies of scale: This myth
takes the form of service recipients demanding cut-rate prices for
highly customised services. "Service providers can only pass along
cost savings from economies of scale if they can achieve scale
through standardised offerings," said Young.
- The myth of self-management: Buyers believe
that once they sign a contract the outsourcer and the contract
itself will manage the service. Most organisations do not budget
and plan adequately for the ongoing management of the relationship
and the services that are provided.
- The myth of the enemy: This is the idea that
service providers are out to fleece service recipients. Many
organisations view contract negotiations as a war in which there
will only be one winner rather than an attempt to create a mutually
profitable relationship.
- The myth of procurement: A related myth is
that the sourcing of services is primarily a procurement exercise
where best price wins. In reality, many services outsourced today
are vital to corporate strategy, and therefore issues of
capability, culture, relationship, and other factors are often more
important to long-term success than price.
- The myth of the steady state: This myth
supposes that, once signed, the outsourcing contract remains set
for its term length. In reality, outsourcing contracts and
relationship management must be developed to anticipate and
accommodate change.
- The myth of sourcing competency: Finally, and
perhaps most painfully, many organisations believe that they have
the requisite expertise to manage complex sourcing environments
even when they have never done it before.
According to Cohen, building a successful sourcing operation
requires a new approach that goes beyond the traditional view of
outsourcing – hence multisourcing.
Gartner describes multisourcing as an innovative discipline that
takes organisations beyond "quick-fix" cost cutting to enable
capability building, global expansion, increased agility and
profitability, and competitive advantage. As such, it requires a
new mindset and frameworks for communicating, interacting with, and
overseeing service relationships both inside and outside the
organisation.
Central to a successful multisourcing approach is the creation
of a sourcing strategy that is tightly linked to the overall
business strategy and constantly monitored by an effective
enterprise-wide governance system.
Firms looking to move beyond outsourcing to multisourcing must
therefore have an integrated, holistic sourcing strategy across all
services and focus efforts on creating sourcing governance
appropriate to the organisation and service needs, said Cohen.
They should also make sure that in evaluating a provider's
performance they measure and track the things that directly relate
to business outcomes.
Finally, companies should also remember that multisourcing is
about building a network of relationships, not just signing
contracts.
