Supply Chain – Sourcing
A company’s supply chain consists of all entities involved in completing a customer sale, including suppliers, manufacturers, distributors, logistics providers, retailers and customers. Supply chain functions include product development, marketing, distribution, procurement and sourcing. Although people may use the terms interchangeably, procurement usually refers to the operational aspects of a company’s strategic sourcing of components and raw materials (Basu, 2017)
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Sourcing
Sourcing has become an integral part of IT strategy.
Operations, Help Desks, Maintenance and Development are all IT activities that have been outsourced.
Sourcing strategies may provide a wider range of skills and lower costs.
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Sourcing Strategies
Sourcing for operation efficiency
Sourcing for tactical support
Sourcing for strategic impact
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Sourcing for Operational Efficiency
The most common outsourcing strategy
Utility functions are transferred to an outside provider – Hardware maintenance or Help desk for example
The objective is to save money and/or provide better service.
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Outsourcing for Tactical Support
IT managers seek to rapidly add to their capacity – when engaging in a large scale project for example, IT may source the entire project or significant parts of it to a vendor
Sourcing is used to free up development staff to eliminate peaks and valleys in the IT staffing cycle – adding temp staff to help out.
Sourcing can be used to introduce new technologies – Training specialists
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Outsourcing for Strategic Impact
As companies have become more focused on core competencies, entire non-core business processes can be outsourced – Payroll, benefits, for example
Supported by greater connectivity – ready access to the vendor
Right-sourcing can change with time; non-core processes can become core processes.
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Outsourcing Critical Success Factors
Figure out your core processes along with what you do well in-house – this is what you keep.
Source those process that other companies do better than you.
Have joint Business-IT sponsorship for sourcing decisions
Develop a detailed contract.
Limit the length of the contract – 2-3 years
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Sourcing Strategy
Develop an in-depth understanding of business drivers and strategy before sourcing.
IT managers should develop a detailed understanding of their functions, processes, and overall IT portfolio.
Test and reevaluate the sourcing strategy.
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Risk Management Mitigation
Detailed planning is essential.
Incorporate monitoring and an audit trail into the contract.
Rate risks on likelihood of occurrence and impact. Take steps to reduce/manage these risks.
Develop an exit strategy – this is part of the contract process
Exercise caution – Understand the cost of outsourcing
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Important Stuff
Sourcing has become an integral part of many IT organizations.
Sourcing has evolved into a means to produce optimal IT value.
Increasingly, it is IT’s job to guide the organization in sourcing decisions.
As a result, sourcing is changing the way IT work is done.
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Week 6 assignment – Compare the services
Visit the websites for the following companies:
Accenture
McKinsey & Company
KPMG
PricewaterhouseCoopers
Deloitte Consulting
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Week 6 Assignment
Search on the website for the digital solutions offered by the companies
Create a table that compares the IT services consulting offerings that the companies have to offer. You might have to do some real digging on the websites to find really relevant information so just be patient while you are searching.
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Week 6 Assignment
Then…answer the following questions
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Week 6 Assignment
If you were an IT manager which of these companies would you employ as a vendor for your business for help with cyber security, digital strategy and business process issues
Post your table and your thoughts at the link in the Week 6 folder. Due February 23 @ 11:59 pm. This assignment is worth 15 marks towards your final grade.
