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 Back to 2005 Press Releases
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Stop Outsourcing Now! Disciplined Multisourcing is the Way Forward, Says Gartner |
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| Gartner releases its latest book "Multisourcing: Moving Beyond Outsourcing to Achieve Growth and Agility", at Symposium/ITxpo in Cannes, France |
Cannes, France - 8 November 2005 - Outsourcing has become such an integral part of successful business practice that many organisations are embarking on outsourcing programmes almost without thinking. Gartner today warned against such compulsive outsourcing and advised organisations to begin a more disciplined approach to multisourcing in order to achieve business growth and agility.
Building a successful sourcing operation requires a new approach that goes beyond the traditional view of outsourcing. "Companies really need to adopt a new approach, something Gartner calls multisourcing, if they are to continue to realise the benefits of outsourcing in the future," said Linda Cohen, vice president and distinguished analyst. Ms Cohen has co-written Gartner's new book Multisourcing: Moving Beyond Outsourcing to Achieve Growth and Agility with fellow Gartner sourcing expert Allie Young.
Multisourcing is an innovative discipline that takes organisations beyond "quick-fix" cost cutting to enable capability building, global expansion, increased agility and profitability, and competitive advantage. As such, multisourcing requires a new mind-set and frameworks for communicating, interacting with, and overseeing service relationships both inside and outside the organisation.
However, before companies are ready to adopt this approach, they need to put an end to compulsive outsourcing. "Chaotic and compulsive outsourcing creates as many challenges as it solves. Furthermore, in many cases, the problems are caused by the immaturity of the organisation's sourcing practices rather than being the fault of the service provider," said Ms Cohen. "Organisations learn too late that managing external services requires vastly different competencies than managing the same, internally provided services."
Gartner research shows that there are eight pervasive myths about outsourcing that are undermining outsourcing success:
- The myth of sourcing independence: This is the idea that sourcing decisions can be made entirely independent of business strategy. As a result, organisations create outsourcing relationships that are incompatible with the business results expected.
- The myth of service autonomy: A similar myth is that services are autonomous-and one sourcing relationship has nothing to do with another. Ms. Cohen says that in today's world, "all of a company's business processes and services are interrelated. We've created an operating environment where autonomous services simply don't exist."
- The myth of economies of scale: This myth takes the form of service recipients demanding cut-rate prices for highly customised services. "Service providers can only pass along cost savings from economies of scale if they can achieve scale through standardised offerings," said Ms Young.
- The myth of self-management: Buyers believe that once they sign a contract the outsourcer and the contract itself will manage the service. Most organisations do not budget and plan adequately for the ongoing management of the relationship and the services that are provided.
- The myth of the enemy: This is the idea that service providers are out to fleece service recipients. Many organisations view contract negotiations as a war in which there will only be one winner rather than an attempt to create a mutually profitable relationship.
- The myth of procurement: A related myth is that the sourcing of services is primarily a procurement exercise where best price wins. In reality, many services outsourced today are vital to corporate strategy, and therefore issues of capability, culture, relationship, and other factors are often more important to long-term success than price.
- The myth of the steady state: This myth supposes that, once signed, the outsourcing contract remains set for its term length. In reality, outsourcing contracts and relationship management must be developed to anticipate and accommodate change.
- The myth of sourcing competencyi Finally, and perhaps most painfully, many organisations believe that they have the requisite expertise to manage complex sourcing environments even when they have never done it before.
Central to a successful multisourcing approach is the creation of a sourcing strategy that is tightly linked to the overall business strategy and constantly monitored by an effective enterprise-wide governance system. "Companies need new approaches to sourcing strategy, sourcing governance, sourcing management, service provider selection and service measurement," said Ms Cohen.
Ms Cohen concluded by saying that to move beyond outsourcing to multisourcing companies need to:
- Have an integrated, holistic sourcing strategy across all services
- Focus efforts on creating sourcing governance appropriate to the organisation and service needs
- Remember that it's about building a network of relationships, not just signing contracts
- Make sure that in evaluating a providers' performance, to measure and track the things that directly relate to business outcomes
Press Contact:
For further information please contact Bite Communications on Tel: +44 (0)20 8834 3508 or email: gartner@bitepr.com.
About Gartner Symposium/ITxpo:
Gartner Symposium/ITxpo is the IT industry's largest and most strategic conference, providing business leaders with a look at the future of IT. For more than 9,000 IT professionals from the world's leading enterprises, Gartner's annual Symposium/ITxpo events are key components of their annual planning efforts. Attendees rely on Gartner Symposium/ITxpo to gain insight into how their organizations can use technology to address business challenges and improve operational efficiency. An integral part of the Gartner Symposium is the ITxpo showfloor, where 60 technology companies will give attendees and press an opportunity to see and experience the latest technology solutions. For more information and to register for Symposium/ITxpo visit http://www.gartner.com/eu/symposium.
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About Gartner:
Gartner, Inc. (NYSE: IT) is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 9,000 clients, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Research and Events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has more than 3,900 associates, including more than 1,200 research analysts and consultants, in more than 75 countries worldwide. For more information,
visit www.gartner.com.
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