4 Essential Multisourcing Optimization Points that will Maximize your Sourcing Agility

Multiple Services, Multiple Parties, Multiple Contracts and Multiple Governance Models are all essential to manage for effective multisourcing and how you choose to manage your multiples will spell out the revenue numbers on your bottom line. The term multisourcing itself means a variety of different things to each stakeholder involved in the process, which makes giving the gifts of your service offering especially difficult. Despite the wide range of stakeholder needs and the accompanying business changes, there are 4 essential factors to optimize for agile sourcing so that you can deliver on all services.

What are the core multisourcing challenges?

The long tail of the market has given us a broad range of global services and solutions and as a result, sourcing contracts are getting smaller and more frequent. The result is an increasingly complex network of outsourcing agreements, each with its own management and governance requirements. These deals also need to be structured to respond to changing business and market needs such as upsizing/downsizing, M&As, Partnerships, sectioning off of non-core business units, etc. Unfortunately, many times the Enterprise Architecture (EA) in place is not as dynamic as the nature of business and the inflexible nature of the EA falls short of handling the necessary changes to compete globally.

Further to this, different functional areas of a business often develop Key Performance Indicators (KPI) and Service Level Agreements (SLAs) at different times. As a result these systems are difficult to manage and build and further to this Gartner research states that “…95% of enterprises worldwide aren’t masters of outsourcing and have room to improve their approach to multisourcing.”

In order to get the most out of multisourcing, what points should be optimized?

In order to multisource more effectively and become the preferred service provider we find that it’s essential to optimize 4 key areas for any service when multisourcing to maximize your organization’s flexibility and responsiveness to changing market demands: Workflows, Integration, Costs, and Governance.

By first standardizing service delivery with clear workflow processes, you will experience a reduced learning curve for new employees and outsourced partners, quicker onboarding time and reduced Mean-Time-To-Repair (MTTR). In addition to this you’ll have established everything you need to repeat the process with new service partners which subsequently simplifies negotiation, improves time-to-market and scalability.

After you have developed clear workflows, the best gift you can give to your outsourced service partners is integration. This allows your customer or partner to maintain use of their existing applications and have access to real-time data. Through integration you save them time and human resources which enables them to eliminate errors and bottlenecks associated with manual processes. By enabling your partner to integrate easily, you also save them an additional learning curve by allowing them to use their own platform instead of requiring that they become proficient with yours.

From our experience we find that the first two points of optimization result in a cost savings of up to 80% compared to 1:1 ebonding solutions and the swivel chair method. In general we find that the more processes you are able to automate and integrate, the more you stay competitive by reducing costly manual process errors and the more you can grow your business.

Finally, to complete the continuous improvement process requires solid governance which comes hand in hand with a clear dashboard to ensure that all service partners are meeting all SLAs and Operating Level Agreements (OLA) and match them with your own KPIs such as Total Cost of Sourcing (TCS) and MTTR. The end goal should be to simplify and accelerate service delivery for your end customer so that they can turn around and deliver better service to theirs because whether they are your customer or not, the customer only sees one thing; success or fail.

By optimizing these 4 main points will enhance your ability to offer services in a way that your customers will be able to continue delivering on their competitive advantage without worrying about managing you. Thus you can subsequently reduce customer churn through maintaining more satisfied customers.

Multiplying your sourcing activities without consequentially multiplying the complexity for your end customers should be the goal of any effective multisourcing strategy and will enable you to give better gifts and enhance your responsiveness to business change.