10 Steps to Successful Multisourcing

A systematic multisourcing model transforms sourcing by driving stakeholder alignment right through its core – but this alignment comes only with meticulous planning and execution.

Moving to a multisourcing model where providers all work toward common objectives requires a fundamental rethink of the principles, governance mechanisms, contacts, and operating models that underpin IT delivery.

Firms need new skills and capabilities to make the model work as well as a new approach to planning, set up, and operation that can withstand scrutiny from the most reluctant business stakeholder.

Forrester has developed a 10-step approach that supports firms as they prepare, set up, and operate their multisourcing model. To achieve multisourcing success, sourcing executives should take the following steps:

Strategy and Internal Preparation: Steps 1, 2, 3, 4

1. Craft guiding principles

The multisourcing model needs a set of guiding principles that the line-of-business stakeholders agree on and sets the tone of engagement with prospective IT providers. Accomplish this by work-shopping a list of desired outputs with their key IT stakeholders, or by using a combination of workshops and methodologies to figure out where the gaps lie between IT strategy, delivery, and business strategy.

2. Audit skills and identify process gaps

Sourcing groups need to audit existing processes to figure out where the gaps are and where investments need to flow. Question whether the existing service levels, operating-level agreements, and underpinning contacts support IT service delivery effectively to internal stakeholders. Running an objective assessment and identifying process gaps lays out what you need to improve or build to support the multisourcing model.

3. Engage participants to create a governance structure

Collaborate with the board, the line-of-business executives, the CFO office, and the enterprise architects down through the organization to the IT procurement, facilities, and IT operations people. Each group will shape the governance mechanisms from a client delivery perspective, such as linking service delivery metrics to the guiding principles, deploying the right commercial models, and deciding how the service catalogues will look. With stakeholder input, sourcing teams will also create the communication structures between the various stakeholders, service delivery managers, sourcing teams, and IT providers.

4. Define the service towers

In theory, firms that already practice selective sourcing should have already done this much work. Others that run internal IT shops or single-source relationships will need to fragment the IT estate into discrete service bundles that can be put out to tender. Conceptualising IT into service towers (networks, infrastructure, applications, etc.) and specifying them as a series of service catalogs will make the RFP process easier later.

Multisourcing Execution: Steps 5, 6, 7

5. Devise the SLA architecture

SLA architectures underpin multisourcing by specifying the operational and collective responsibilities from your group of IT providers. Rethink SLAs as operational agreements tied to the service catalog – i.e., a set of SLA metrics that cover service availability of the help desk. Operating-level agreements (OLAs) support these operational SLAs by defining ITIL standards for the configuration management database (CMDB) that the service catalog feeds into, and the CMDB supports the service integration. Rethink another set of SLAs as aspirational agreements tied to expectations for collaboration, such as an improvement in help desk handling.

6. Execute the RFP and contracts

The process of running the RFP starts with developing a prequalification questionnaire that evaluates suppliers before assembling a long list of IT providers. The RFP links into the prequalification questionnaire with both documents featuring an upfront “rules playbook” outlining how your SLAs and OLAs connect together to drive IT strategy. The RFP then specifies tower by tower how service requirements link into the service catalogs and CMDB that underpins each service tower. Once the down select decision is made and the invitation to negotiate is issued, then the contracting process starts with supplier negotiations and workshops. Contracting takes its cue from the OLA and links IT providers together through the master service agreement signed between the customer and IT providers — as long as each provider signs up to the connected OLA, then each provider can be contracted separately.

7. Implement internal and external transition paths

Create a guide for internal activities as you shift work from your incumbent providers to the new structure. This breakdown needs to support roll up reporting for each service tower with clear deliverables, milestones, and dependencies before you can move onto the next stage dealing with external transition. A second guide charts the external transition with due diligence breaks to ensure that each IT provider conforms, for example, to the service catalog structure and other process baselines set in the OLA.

Governance and Vendor Management: Steps 8, 9, 10

8. Manage cross-provider delivery

Monitor service integration and cross-vendor delivery by recruiting individuals (or reorganise internally) that understand the processes, tools, and methodologies that underpin service integration. The CMDB is a critical element of service integration; it integrates data from a variety of monitoring and management tools embedded across the business. Moreover, IT providers need checking to ensure compliance with the standards set out in the OLA to ensure common standards are in play.

9. Monitor performance

Direct vendor management executives to monitor service delivery against contracts and OLAs. Core procedures like risk management and performance improvement ensure continuity of service for your stakeholders. Watching the SLA dashboards, running regular check-in reviews, and flagging service delivery issues early on should preempt the removal of any IT provider.

10. Facilitate an innovation council

Tasking IT providers to innovate together and making the innovation work for stakeholders means bringing both sides together on a regular basis. Here lies the quid pro quo for your IT providers – they get access to stakeholders, insight into how the business is moving, and an opportunity to propose process improvement initiatives or strategic service propositions between them.

Euan Davis is a Senior Advisor to Forrester clients that participate in the Sourcing & Vendor Management Leadership Board in Europe. He is a recognised expert on sourcing strategies for his clients.