Multi-vendor sourcing
Developing differentiated offerings | Service level packages | Advantage of core service packages | Organizations | Organizational development | Case example 12 (solution) | Organizational change | Organizational departmentalization | Sourcing strategy | Deciding what to source |
The approach of sourcing services through multiple providers has emerged as a good practice. The enterprise maintains a strong relationship with each provider, spreading the risk and reducing costs. The challenges are in governance and managing the multiple providers. When sourcing multiple providers, the following issues should be carefully evaluated:
- Technical complexity: sourcing is useful for standardized service processes. Be mindful that as customization increases it is more difficult to achieve the desired efficiencies.
- Organizational interdependencies: contractual vehicles should be carefully structured to the dynamics of multiple organizations. Incentives, training, and other intangibles can have significant long-term effects.
- Integration planning: carefully consider the need for integration planning and solutions. This can take the form of standardized reporting and service reporting, or installed technology and protocols that integrate tools and data.
Figure 6.13 The service sourcing staircase
There are multiple approaches and varying degrees in sourcing. How far up an organization is willing to go with sourcing depends on the business objective s to be achieved and constraints to overcome (Figure 6.13). Regardless of the sourcing approach, senior executives must carefully evaluate provider attributes. The following is a useful checklist:
- Demonstrated competencies: in terms of staff, use of technologies, innovation, industry experience and certification s (ISO/IEC 20000)
- Track record: in terms of service quality attained, financial value created and demonstrated commitment to continual improvement
- Relationship dynamics: in terms of vision and strategy, the cultural fit, relative size of contract in their portfolio and quality of relationship management
- Quality of solutions: relevance of services to your requirement s, risk management and performance benchmark s
- Overall capabilities: in terms of financial strength, resource s, management system s, and scope and range of services.
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