Now here’s an analogy — watching women buy shoes has similarities to observing sourcing sweepstakes for global services. Some shoes are stylish but too narrow in cut; others suit feet with high arches rather than flat. By way of extrapolation, companies sometimes try to shove their organizations into a services solution that just does not fit their DNA. Ways of working, power base, the dominance of the supply chain, performance culture — all of these factors need to be incorporated into the DNA of a company. And when a solution just doesn’t fit? Well, ask the woman who shoves her size seven foot into a size six, five-inch Jimmy Choo — it’s sheer agony.
Fitting a services solution is not just a left-brained adopt a sourcing methodology, tick the boxes, calculate the return on investment, beat the provider into price- and scope-submission exercise. Successful sourcing is predicated upon an honest assessment as to how the company really functions — its market conditions and challenges, where the sourcing power base resides, the drivers of its culture, amongst other factors. Such factors have a substantial bearing on the structure of the solution — end-to-end or single process; focus on cost or push for value; highly customized or off-the-shelf.
Outsourcing as an industry is at least 20 years old, yet we have not identified the patterns to date that suggest certain types of companies are most successful when they source certain types of delivery. Unfortunately, there is no outsourcing Myers-Briggs scale that suggests the fit between factors and the range of solutions.
Looking around the outsourcing industry, it is possible to discern a clustering of certain factors or characteristics that empirically suggest at least five distinctive customer profiles. Each profile in turn suggests outsourcing values, or what each profile tends to buy.
The process-driven customer
This customer type faces stiff competition for price and quality in a mature, saturated market, often in a real or perceived race for product superiority in a commoditized marketplace. Think mature products or services with low margins and potential for growth; for those companies where process drives production, increasing market share and margins is of paramount importance.
Often the organization is very controlling and hierarchical, often in a regulated industry. The procurement department takes on great prominence in the sourcing process As a result, benchmarking is a very important performance-management tool.
Outsourcing value: For these customers, whose processes are driven by benchmarks, acceptable functionality at a lower cost compared to the competition is the key buyer value.
The marketeer
Companies in the marketeer category must cope with and manage rapid market shifts in order to survive. These organizations, often hollow in structure with production through contract manufacturing, require economies of scale, flexible production capability and low overheads to thrive.
The organization is driven by customer needs and wants, and Peter Drucker’s theories drive the organization. The sourcing decision may rest in the hands of the corporate center, or geographic management can pull the trigger to outsource, depending on the need for flexibility.
Outsourcing value. Because of the need for speed to end state, and avoidance of capital outlay, marketeers typically source flexible “plug and play” functionality rather than customized solutions.
