Sourcing & Vendor Relationships - Gartnermktimages.gartner.com/apac/symposiums/2011/gc11/gc11... · 2012-02-02 · President, Sourcing & Vendor Relationships Track Manager We need

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Sourcing & Vendor Relationships

Conference summary report

© 2012 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or its affiliates. Risk-Adjusted Value Management is a trademark of Gartner, Inc. or its affiliates. For more information, email info@ gartner.com/au/symposium or visit gartner.com.

Thank you for making Symposium/ITxpo 2011 our most inspiring event ever.

Your enthusiasm, insights and willingness to share with your peers is why Gartner

Symposium/ITxpo is the world’s largest and most important gathering of CIOs

and senior IT executives.

Transforming IT’s relevance in an organization Re-imagining IT — our theme for 2011 — calls for you and your peers to “lead from the front.” While there still remains a great deal of economic uncertainty, the explosion of IT and advanced technologies is undeniable. As a result, there is a much-needed focus on customers, employees, consumers, competitors and suppliers. They are all quickly becoming part of the IT ecosystem that will be supported by the IT organization. Given that backdrop, it’s critical for leaders like you to rethink or re-imagine IT’s relevance within the organization. We hope your experience at Symposium/ITxpo this year gave you a fresh pair of eyes on the issues that matter most — from supporting new business models to gaining positive impact from transformative technology initiatives like cloud, social networking, mobility and context-aware computing.

To assist you in your reporting efforts, we’ve created this special report to provide you with an at-a-glance review of select keynotes, session take-aways and other conference highlights.

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Thank you for your feedback, and we look forward to seeing you again next year at Gartner Symposium/ITxpo, 12 – 15 November 2012, in the Gold Coast, Australia.

ContentsMessage from the chair 2

Key take-aways 2

What attendees asked about 4

Things to watch out for 4

Conference session highlights 5

2011 Symposium/ITxpo Sponsors 8

Post-event tools and tips 9

mailto:simone.hulse%40gartner.com?subject=Gold%20Coast%20Symposium/ITxpo%202012%20from%202011%20Post-Event%20Reports


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14 – 17 November • Gold Coast, Australia • gartner.com/au/symposium



Message from Jim Longwood, Research Vice President, Sourcing & Vendor Relationships Track Manager We need to re-imagine our approach to sourcing. These are turbulent times in which hype in the marketplace around cloud computing, utility and as-a-service models (like infrastructure and software) are disrupting traditional sourcing strategies and causing much confusion. Meanwhile a more disciplined approach to managing multiple vendors is an imperative as even more service providers become more imbedded in enterprise IT service delivery and more critical to business operations.

So what approach should organizations take? Should they dive into these alternative delivery models or cautiously dip their toe into the water? And once they decide to begin the shift from traditional, highly customized outsourcing to the highly standardized approach of cloud and industrialized low-cost services, how well will they adapt to new vendor management concerns in an environment where service providers define the terms? Buyers must realize that the business case for enterprise-focused cloud services and other alternative delivery models is complex. The ROI may not be as positive as promised and the tradeoffs risky.

Key take-aways

The danger of tactical sourcing

One of the primary reasons for outsourcing dissatisfaction is a tactical, ad hoc approach in which IT services’ sourcing decisions are misaligned with business objectives. An IT sourcing strategy should define and integrate internally and externally provided services to fulfill an enterprise’s business objectives whether you adopt a traditional IT outsourcing or emerging as-a-service cloud computing strategy.

Managing vendor risk

Effective contract terms are essential, but you also need to develop a solid risk analysis framework that details the obligations and responsibilities of all parties. This framework should also describe the process that will be used to manage risk, and specify which risks you consider unacceptable, particularly as the number of vendors you engage with increases substantially as cloud computing takes off.

Vendor management discipline

The benefits of a vendor management discipline implemented across the organization include lower costs, improved cycle times and a more efficient outsourcing services portfolio. What’s more, when it is clearly articulated and executed, vendor management discipline can encourage your vendors to be more proactive and better aligned with your strategic sourcing goals of delivering end-to-end service and business outcomes.

Jim Longwood Research Vice President, Sourcingand Vendor Relationships Track Manager


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Globalization

Companies are expanding globally. Emerging markets are the new frontier for demand and supply. Many Fortune 500 companies are deriving at least half of new revenue from these emerging markets. How do you source services to deal with that? Over the last 20 years, a common value proposition in offshore outsourcing has been low-cost labor. But with the rise in staff attrition, wage inflation and rupee versus the dollar in India, organizations are considering other offshore or nearshore locations. You should be considering other objectives for your global sourcing strategy – such as the acquiring of skills, intellectual property, or increasing speed to market. The drive towards cheaper resources may be superseded by better quality and faster service.

A New Sourcing Decision Framework

To realize long-term benefit from sourcing decisions, organizations should also focus on business objectives to determine which IT services and processes they retain, and which they outsource. Use this decision process framework to ensure your sourcing is directly aligned with business goals and performance requirements. By sequentially answering these seven questions, you will set the scene for bringing better discipline and predictability to your sourcing decisions.

1. Why outsource: establishes reasonable expectations and forces consensus on your objectives.

2. What is a candidate for outsourcing: identifies the target processes or services for improvement.

3. Who should deliver the services: focuses on the best source of supply to accomplish your objectives.

4. How will the services be delivered – standardized or customized: forces alignment of your objectives and the optimum service delivery model.

5. Where should the services be delivered from: applies the right criteria for selecting the best location for service delivery.

6. When does the strategy need to be implemented: determines the optimal timing for taking sourcing decisions.

7. If/then: identifies triggers to reassess sourcing actions


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Things to watch out for — challenges and opportunities

Role of Sourcing Executives

In the future, organizations will no longer think about buying a technology product, and then consider outsourcing it later, but rather, will think first about buying it as part of a portfolio of services. As a result, sourcing executives will play an increasingly vital role in their enterprises’ business activities, and the IT vendor management and IT procurement competencies will become essential.

Cloud’s impact on traditional vendors

Traditional outsourcing vendors will be challenged to adapt to the new realities of cloud services, Outsourcers will have to become cloud-service providers or brokers themselves, or risk the erosion of their traditional product and IT services market shares.

Changing Vendor Landscape

As in any big change in a market, there are always plenty of new players, offering new services or service layers. These new entrants may be adding their own differentiated value by behaving as a broker for cloud delivered services. Or they may be adding their own differentiated value into the service value chain by providing service integration between the different services providers. Among these new market players are traditional telecom providers as well as organizations like Amazon and Google, who weren’t on the scene ten years ago and who may dominate in ten years time. As the economy picks up, expect to see more mergers and acquisitions — small companies with niche specific software and services, being acquired by bigger vendors.

What attendees asked about — and the answers

Which is the best country to offshore to?

Through 2014, India’s dominant position as an offshore location will be progressively diluted by the growing competitiveness of alternative destinations. India is still the dominant location for offshore services for regional buyers of services because of its scale, quality of resources, and strong presence of local and traditional service providers. However, rising wage and attrition rates and operational costs in India continue to be a concern among buyers (and providers) for immediate and long-term planning. With that in mind, you may want to consider offshoring to other countries whose vendors’ deal sweet spots better align with smaller to mid-size deal scale requirements that we typically see in Asia. But before selecting the country or vendor, determine the objectives and the intended value for your enterprise, taking into account other cost and risk factors analyzed by Gartner. The Gartner annual report on the leading locations for offshore services identifies a country’s current suitability as an offshore location. See “Gartner’s 30 Leading Locations for Offshore Service, 2010-2011” (G00209224).


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Conference session highlights

Revolution Amidst Evolution: The Top Ten Game Changers for IT Sourcing

Presenter: Linda Cohen, Vice President and Distinguished Analyst

The world of IT is changing rapidly. CIOs and sourcing managers must understand and adjust to game-changing forces for long-term success, especially because these forces, in combination, will grow and magnify in intensity. Clinging to the status quo will be a career-limiting approach. The role of IT management and sourcing leaders as well as the role of service executives will be more important than ever before to help their respective organizations navigate the current market forces and apply new norms of outsourcing in a successful way. The top 10 game changers for IT sourcing this session identified and examined include the following:

• An uncertain economy: Worldwide economic challenges have propelled the acceptance and adoption of alternative delivery models.

• Gen Y Workforce: The changing workforce has increased expectations for agile, flexible and responsive technology and will bring their own.

• Globalization: The IT labor pool, enabled by the Internet and global connectivity has broken down the notion of on-site delivery only.

• Sustainability: Vendor evaluation criteria will change as sustainability goals and directives permeate the enterprise.

• Cloud Computing: These new services represent a fundamental and irreversible shift in architectures, development and delivery methodologies, and management strategies.

• Industrialization: This continuing trend that has grown in popularity drives solutions that are standardized, utilitized, highly automated, repeatable, scalable and reliable.

• Asset Light: This shift from internal assets ownership to external assets represents a structural change in the IT market where IT is massively scalable, standardized, componentized and delivered as a service.

• Consumerization: The “always on” mindset is rapidly blurring the boundaries between working and private life. These consumer-oriented technologies and behaviors have accelerated dramatically and are affecting the course of enterprise IT strategies.

• Unpredictability/Vendor Risk Mitigation: Organizations can’t assume that vendors will continue to remain viable in a market disrupted by economic forces, mergers and acquisitions and new delivery models. As a result, specific risks relating to external vendors for IT delivery must be continually assessed and mitigated.

• Externalization: Organizational financial models will change from investment in IT as a capital expenditure to managing IT as an operating expenditure. Organizations will pay for services based on usage/volume and as they do so budgets for external IT spending and decision making will become more essential and subject to even greater scrutiny.

Linda Cohen Vice President and Distinguished Analyst


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The CIO Guide to Managing Vendors

Presenter: William R. Snyder, Research Vice President

CIOs have spent an entire career building up the skill sets to effectively manage the application of information technology. But often that training and preparation skips over the how to’s of managing external vendor relationships that are integral to IT success. Here are a few key examples of what CIOs need to know to effectively manage vendors and still keep business and IT goals in alignment:

• Avoid viewing all vendor behavior in a negative light.

• Separate relationship “noise” from true problems.

• Don’t abdicate control of the relationship.

• Recognize and create a balance of incentives and disincentives to drive performance.

• Demand performance beyond strict contract deliverables.

• Create and manage a dashboard of both performance and relationship quality.

• Realize that holistic management is key.

• Invest in a strategic vendor management program for your key vendors.

Boost the Value You Get From Outsourcing in 12 Weeks

Presenter: Rolf Jester, Vice President and Distinguished Analyst

Outsourcing is getting more complex. New alternative services are altering the landscape; the change rate in organizations is increasing while the gap between what outsourcing relationships actually deliver vs. expectations is widening. In this new era, successful sourcing strategies will differentiate winners from losers. Tactical, ad hoc approaches will no longer satisfy the increasing complexities of the business. Even though implementing a multisourcing management discipline within your organization is not easy, plenty of organizations are doing it and realizing bottom-line results. These 12 steps will increase the value of your outsourcing projects and initiatives:

• Create an effective dialogue between demand and supply.

• Establish a sourcing strategy process.

• Implement a sourcing risk management framework.

• Improve your key multisourcing competencies.

• Establish sourcing governance.

Rolf Jester Vice President andDistinguished Analyst

Williams R. Snyder Research Vice President


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• Improve your service provider relationships.

• Build a culture of collaboration.

• Upgrade your IT metrics and link them to KPIs

• Evaluate performance measures and improve dashboards.

• Set up virtual end-to-end services with OLAs.

• Get innovation working.

• Evaluate your sourcing and vendor maturity.


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Thank you to our 2011 Platinum Sponsors

Please click here to view ALL sponsors

http://www.gartner.com/technology/symposium/gold-coast/exhibitor-directory.jsp


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Sourcing & Vendor Relationships - Gartnermktimages.gartner.com/apac/symposiums/2011/gc11/gc11... · 2012-02-02 · President, Sourcing & Vendor Relationships Track Manager We need