Sourcing 2010
In the recent Delphi research, we found that while 52 percent of all organizations involved in sourcing were offshoring some part of the sourcing arrangement, of those, 40 percent were dissatisfied with the results. Yet nearly 70 percent of all organizations considered offshoring strategic to their organization’s growth. Let’s face it — you can’t adopt a long-term strategic direction around something that does not also deliver high levels of satisfaction.

What’s needed is a new generation of sourcing tools that bring in a new level of sophistication, science, and predictability to how we manage and innovate through global sourcing. 
The vision I have is of a sourcing environment that works in much the same way that fly-by-wire planes do.

In aviation, the sophistication and power of planes grew exponentially during the twentieth century. With this came the need to depart from the traditional cable and pulley operated controls to hydraulic and electromagnetic controls that not only allowed the pilot to expend less energy on the physical aspect of flying, but more importantly, to focus on the use of instruments and the actual processes of flying.
We are seeing much the same happen in global sourcing where organizations are feeling overwhelmed by the weight of manually managing global teams. It can be done, but at great cost, energy, and loss of opportunity.

Imagine that instead of today’s retrospective project reviews, and end of cycle productivity metrics, program managers, teams, sourcing partners and customers have real-time dashboards that provide instant metrics on productivity from whatever perspective needed. These dashboards would provide immediate visibility into a process, collaboration, problem situations, and new opportunities instantly.

Real-time dashboards may seem far-fetched but then again so did the notion of moving work around the globe, just as rapidly, only a decade ago.

Trust — The Last Mile
The final factor to consider in the evolution of sourcing is that of trust. I don’t mean trust as a function of integrity but as a measurable element in the relationship between sourcing partners and customers. In the final analysis, trust only develops as the result of predictable and repeatable behavior. The more often actual outcomes meet expected outcomes, the greater the trust between any two parties.

So how do we develop trust in a sourcing relationship? The answer is much more mechanical than you may expect, and it goes back to the evolution of a real-time sourcing model. Delphi’s research has shown that the three driving factors in selecting a sourcing partner always end up being reputation, price, and real-time monitoring of performance. It’s that last one that takes most people by surprise.

Amazingly when we presented 300 sourcing decision-makers with real-time monitoring as an option to select from in assessing the benefit of a partner’s approach to sourcing, it always ranked at par with price and reputation. However, few respondents, who were not presented with the option, volunteered it as a criterion. In other words, if you don’t know how to ask for real-time monitoring you won’t put much stock in it. Why? Simply because few of us consider sourcing to be enough of a science to warrant that kind of scrutiny. It may not be, yet.

So if you’re trying to plan for the future, don’t wait. Starting now with real-time monitoring and metrics are the essential elements in achieving increased productivity, transparency, performance and innovation. Ultimately trust is founded on this sort of integrity and predictability. And soon enough it will be a standard part of how sourcing is done.

Anything less will leave the sourcing industry and its users struggling to keep up with a global capability that has far exceeded the tools and methods available to manage it.    

Voted as one of the IT industry’s six most influential consultants by InformationWeek magazine, Tom is one of the industry’s most prolific thought leaders. He is also ex-MD of Perot Systems Innovation Lab where he ran a global practice focused on sourcing innovation.