Sandeep Bhargava, Managing Director, Asia Pacific and Japan, Rackspace Technology, asks what exactly is smart sourcing and what steps do organizations need to take to achieve it?
In the past year or so, organizations have encountered new challenges that require modern solutions to solve their clients’ increasing needs. In many cases, these challenges were addressed by inefficient legacy technologies, which made the transition to the work-from-home settings more difficult and tedious. Most, however, have managed to rise to the occasion, stretching budgets, skills and capacity.
As a result, many businesses have embarked on digital projects, which accelerated cloud adoption. In doing so, many have realized the need to govern their IT infrastructure differently to access suitable services for their specific requirements in the right way and at the right time.
As they continue to reinvent the role of IT in their business, a new trend of ‘smart sourcing’ has emerged. Smart sourcing is the strategic way of taking control of their IT infrastructure by making the right and competent decisions for organizations to become more agile and flexible in managing their IT estates. This ultimately enables them the freedom to innovate rapidly as technology constantly advances.
Following the catalysing effect of the pandemic on a new era of IT, what exactly is smart sourcing and what steps do organizations need to take to achieve it?
Outsourcing vs smart sourcing
Outsourcing IT is a popular solution by many industries as it is seen to improve productivity and efficiency, while reducing cost and risk.
However, many organizations have learned that, while outsourcing can bring them the required performance in the short-term, retaining key knowledge is vitally important over the long-term to avoid the vicious cycle of reducing capability and increasing dependency on third-party providers.
Consequently, the trend is shifting to insourcing and smart sourcing. This empowers organizations to take control of their technology by upskilling their in-house teams.
Yet despite the long drive behind the Singaporean government’s cloud-first strategy, there is still debate around the best way to harness the technology – a debate that is made more complicated because no two organizations have the same estate and architecture as starting points. So as a crucial first step, each one needs to understand their current situation and their desired destination, in terms of services and technology.
This shift has occurred alongside a significant drive to take up cloud services. While not all leaders of organizations are convinced by the ‘cloud-first’ approach, most do recognize the intrinsic role of the cloud in their plans. As a result, many organizations are now transferring specific sets of data and applications into public and private cloud repositories. This trend has been accelerated by the pandemic, to the point where it is unlikely that there is any organization in the public sector that has not looked, or isn’t looking, at the cloud and the best ways to source its technology requirements.
Getting smarter with IT
The accelerated adoption of cloud technology, coupled with a growing appreciation for the need to bolster in-house IT expertise, is encouraging more businesses to consider smart sourcing as a more flexible approach that allows scope for procuring the ‘best of breed’ solutions.
Smart sourcing can provide a fruitful middle ground between fully outsourced and in-house delivery of IT services that maximizes the benefits of both worlds to create a future-proofed technology environment.
It can also help organizations find the right blend of cloud platforms, including hybrid and on-premise systems, to create a multi-cloud approach that meets their unique demands. It also enables them to balance investment in external and internal skills, paying for the former only when there is real value in doing so, and building up the latter to increase their control over the long-term.
With the flexibility and agility required in today’s digital world, smart sourcing is a continuous process, not a one-off event. It is a ‘mindset’ that empowers IT leaders to get the best combination of technology services and suppliers for their organization as their needs evolve. It requires smart thinking to maximize the plethora of cloud options available – treating multiple suppliers as a menu from which to find the right fit for their organization.
Getting on the road to smart sourcing
One of the first steps to smart sourcing is to map the organization’s current services and technology architecture, including that of any existing outsourcing contract. This tracks how it is performing and its effect on customers, which allows organizations to understand how it can be managed for optimum results. A thorough understanding of the organization’s information architecture is also key, along with assessment of the critical or commodity nature of each element. Inevitably, as elements change, there are impacts on other parts of the whole, knowing exactly which components fit where is essential to making a good start.
Secondly, it is vital that organizations ensure that their skills and knowledge are retained and invested in education, especially because keeping a core internal team offers a degree of agility. In the main, smart sourcing is around out tasking and not outsourcing so knowledge is rarely impacted.
Choosing the right path for your organization
Ultimately, while big changes in technology and business management can open up new opportunities, there is no one single approach that is likely to provide the best solutions for all organizations. Many are thereby coming to realize that smart sourcing brings the benefits of both in-house and third-party skills and allows businesses to maximize the benefits of the cloud services they leverage such as improved scalability and cost savings.
In turn, businesses can have the ease of mind to focus on their strategic goals to innovate in this competitive landscape while still taking control of their IT and achieve high levels of effectiveness.
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