IT Sourcing is the process of choosing or procuring information technology resources from a party outside of the organization. Traditionally organizations would outsource their mundane IT activities as a single contract with a single partner which was done mostly as a cost optimization solution – the lowest bid would generally get the contract. With a fast-changing global economy and evolving business objectives, it has become essential for CIOs and IT Managers to create a strategic sourcing plan where the relationship with the vendor would be one of collaboration; ensuring their capability to respond to the organization’s changing business needs in order to deliver value.
Why UK companies should master the multi-vendor approach to IT sourcing?
As Brexit and IR35 changes approach, it is becoming increasingly more apparent why UK companies need to adopt a multi-vendor approach to IT sourcing. So, what can UK based companies learn from their European counterparts who seem to be ahead in this approach?
- IT Outsourcing: UK companies have outsourced IT operations to big system integrators through multi-year frameworks, and that hinders external innovation up in many ways:
- Outsourced too deep: Many UK companies have outsourced some of the key roles like strategy, architecture, design and programme delivery etc. This limits their ability to make decisions and manage small suppliers on their own without dependency on the system integrators.
- Procurement Frameworks: Procurement frameworks skewed towards big players limit entry of startups through a direct supplier route.
- Monopoly over as-is knowledge: Often startups and clients themselves depend on system integrators for as-is knowledge and transition to BAU.
- Risk taking culture: Having worked with global companies for some time it is striking how culturally the British have less appetite for risk taking, which suffocates innovation, especially in comparison to their continental peers.
- Language: As an English-speaking country, system integrators were able to penetrate UK market faster, whereas in continental Europe, local language knowledge is valued, so outsourcing options are more varied.