Redefining an operator’s sourcing strategy – What to do?
One of our clients in Europe is facing the challenge of revising its service platforms’ sourcing strategy and redefining it from scratch. Peculiar, as this is something I did not see since 2004 where this topic was relatively hot and most of the mobile operators were following this directive.The severe decrease of margins plus the maintained (and significant) reduction of VAS and voice revenues of the last periods have outlined the need to revise our client’s current sourcing strategy, towards financial performance improvement and new service models evolution.
But first, let me write some definitions. What do we understand for sourcing and sourcing strategy? Sourcing is the delivery of internal and external resources and services required to ensure that business objectives are met, while sourcing strategy are the set of scenarios, plan, directives and decisions that defines and integrates the sourcing of a given business.
Sourcing has been taking more importance in the last years due to the increased number of IT solutions that operators have been incorporating to their IT / Service platforms portfolio and the increasing complexity to manage internally all these IT supported services & processes.Sourcing is not a simple task. When defining a sourcing strategy, an operator must take a holistic approach to minimize and control the execution risks of any new business strategy. Therefore, it should cover at least most of the following areas:
1) Strategic goals. Business results to be obtained thanks to a sourcing strategy, measuring the operator’s ability to accomplish biz strategy
2) Internal capability. Competencies, business and IT processes and services residing in the operator’s organization to fulfil sourcing objectives
3) External market capability: Degree of competency and maturity of the technology in the IT service market
4) Sourcing models design: Current or future ability of an operator to engage and exploit different sourcing approaches and models
5) Sourcing governance: Sum of management capabilities, methods & processes, organizational roles & responsibilities, and rules & agreements to support the delivery of services
We have been required to advise the typical steps in a sourcing strategy definition, main reason of this post, and this is the slide I have prepared (please see next), including not only steps but also some interesting questions of which I would like to hear answers if I was a COO or CTO.
Feel free to contribute and / or challenge my point of view. Nice reading