The world is a big place – as organizations expand and technology management needs grow, outsourced provider help is becoming increasingly inevitable. Strategic sourcing is your best chance to not only find a solution that works, but to maximize savings and minimize risks at every step along the way.
As more and more businesses seek efficiency enhancements and competitive differentiators in today’s fiercely competitive marketplace, traditional sourcing roles are changing. What used to be a tactical purchasing team has evolved into a strategic function uniquely equipped to align organizational goals with the appropriate technologies and management partners.
Going forward, the combination of economic uncertainty, political instability, and technology-driven disruption will only solidify strategic sourcing’s importance. However, this is a vague term that encompasses dozens of specialized concepts – so let’s explore what exactly strategic sourcing is and why it matters to you.
Tactical vs. Strategic Sourcing
In the past, sourcing initiatives took a largely tactical (a.k.a. reactive) approach to technology purchases. Vendors and solutions weren’t identified until after a need was uncovered – and everybody knows how patient users that need tech support are…
Beyond cost savings, this model failed to deliver impactful business benefits or overcome the industry’s most important challenges. Since these decisions were often rushed and made with short-term considerations in mind, solutions rarely aligned with core capabilities in a way that optimized future spend and functionality.
Strategic sourcing, on the other hand, is a more proactive and holistic approach to purchasing outsourced technology products and services. In this model, the lowest possible total cost of ownership is achieved because it prioritizes not only cost savings but minimizing supply chain risk and maximizing external partner relationships – creating a continuous loop of feedback, efficiency, and increased value.
At every stage of the purchasing process, strategic sourcing performs assessments to ensure organizational needs are efficiently and effectively satisfied. To make this possible, these next-gen efforts use spend analysis, solution provider evaluation and relationship management capabilities, detailed market research, and more to create a long-term process that maximizes the business value an outsourced technology solution provides.
As such, it’s not easy to implement or perform. Strategic sourcing requires specialized employees and the right mix of tools and technologies to pay off. If implemented well, however, you can expect to experience benefits like:
Okay, this one is pretty obvious – I’ll give you that. However, strategic technology sourcing creates optimal savings both today and tomorrow. By carefully identifying and selecting a best-fitting provider, you ensure a solution that’s not only purchased at an ideal price, but that it’s one capable of providing ongoing value, too. That means more money and resources to allocate towards business growth instead.
Better Business Alignment
The core of strategic sourcing is aligning solution provider capabilities to your most pressing organizational needs. Through this process, technology is better positioned to enable performance, productivity, and efficiency gains to drive progress and digital transformation forward.
Beyond traditional compliance checks and performance analyses, strategic sourcing minimizes risks across the entire supply chain. By evaluating more than financial viability or corporate responsibility, these advanced solution changes and implementations can help you prioritize performance improvements in a way that secures activities and future proofs your purchase lifecycle.
Guarantee Strategic Sourcing Success
Now that you know what strategic sourcing is and why it matters, there’s one pressing question left to answer: how do you make it happen?
While there are many approaches that can work for your organization, here are six basic steps you should take to make strategic sourcing a reality.
- Step #1: Market Research & Analysis
- Step #2: Assess Your Current Process & Identify Improvement Opportunities
- Step #3: Vendor Selection Process
- Step #4: Focus on Long-Term Improvements
- Step #5: Implement More Strategic Tools
- Step #6: Find Your Future Sourcing Experts
A new sourcing process can only happen if your business leaders and executives buy into the initiative. If you need help making a business case for strategic sourcing, look no further. AOTMP® University’s Building a Business Case for Sourcing a Technology Solution Course has everything you need to succeed.