Emerging technologies and innovations are creating new business opportunities and changing the way companies do their business. IT departments are playing a more important role in this change and should therefore transform from supporting cost unit to a more proactive business-oriented driver. In some cases they can even dissolve in business units as shown by many examples from banking and insurance or telco domain. These IT teams work more tightly with businesses, question the status quo, demonstrate the abilities of technologies and propose new solutions to existing problems. Mutual iterative dialogue of business and IT also typically generates new business products and services.
Technology trends connected to this change are quite known and utilized already. None of them are really new. Cloud services, standardization and automation, Internet of Things and big data, are, to some extent, used also in conservative companies. These trends require new skills and abilities from IT departments and move them towards project and improvement types of work by outsourcing standard and repeatable operational tasks (making them a commodity). Mentioned shift together with the constant push on IT to deliver more value with the same or lower budget require change in operational and governance routines. You cannot do the same things you always did in a quite new context.
As the trending technologies mature and many companies adopt them, the outsourcing models also change. Common big outsourcing package of many IT services sourced to one vendor is now decomposed into many microservices managed by various vendors ranging from big corporations to small and quite new startups. This trend heavily affects businesses as they are not prepared for the governance leap connected with it. Multi-vendor sourcing model requires sound governance model with much more coordination effort on company side and also visualizes current process inefficiencies.
Quite a lot of businesses are surprised by the symptoms of visualized inefficiencies and blame the multi-sourcing model or vendors. Managers usually start to attack those symptoms, not root causes, and make the whole situation even worse, frequently ending with final insourcing of the services with a huge waste of money and loss of workforce and opportunities. The underlying root causes are very different and should be tackled even before the sourcing effort starts.
Besides the trends and their impact, we also uncover the list of typical root causes of issues in multi-vendor sourcing environment and list the steps that can be taken to avoid or improve the situation.