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The Sourcing (SRC) capability aims to streamline the strategic planning and development of the IT supply base to optimize the contribution of the supply base to the organization's strategic objectives.

• Establish a common approach to selecting IT suppliers for their operational contribution and potential strategic impact, instead of awarding contracts only or mainly on the basis of lowest bid price.
• Assess the value and relevance of current and potential sourcing opportunities and relationships according to long-term goals and overall business and supply management objectives.
• Achieve both cost reduction and improvement in IT supplier performance.
• Ensure continuity of supply if a supplier's operations are unexpectedly disrupted or when switching suppliers.
• Leverage good practice and innovations from the supply base to support business innovation.
• Increase organizational effectiveness by simplifying, automating, and integrating sourcing processes across the organization.

The Sourcing (SRC) capability fosters mutually beneficial partnerships with the supply base by developing appropriate sourcing relationships based on market knowledge and the business objectives.

A rapidly evolving business environment continually challenges organizations to reduce costs, increase productivity, and deliver innovation. Many organizations turn to external IT service providers, who offer economies of scale and technical know-how, to address some or all of their IT service needs¹. Additionally, the rise of ‘everything-as-a-service’ (XaaS) means that external IT services can be procured more easily than ever before. Research indicates, however, that organizations without an overarching IT sourcing strategy can experience significant difficulties, including vendor lock-in, rigid contracts, and security and service level concerns, leading to an erosion of the original sourcing benefits. Equally, organizations that rely exclusively on their internal IT functions to provide all IT services can suffer complacency, high costs, and lack of innovation. This points to the need for a balanced, incremental, and selective approach to sourcing IT services².

With an effective Sourcing (SRC) capability, an organization is able to define an appropriate sourcing strategy, manage the selection of IT service providers, integrate internal and external services, and ensure the delivery of innovation and business value.

The Sourcing (SRC) capability is the ability to evaluate, select, and integrate IT service providers according to a defined strategy and sourcing model, which could include service providers both inside and outside the organization. The Sourcing (SRC) capability covers:

• Defining the strategy for sourcing IT services and the high-level business cases for sourcing initiatives.
• Defining the sourcing model, including, for example, considering internal or third-party sourcing arrangements, on-shoring, near-shoring, or far-shoring, and single or multiple IT service providers.
• Developing criteria for selecting providers and processes for choosing the most advantageous provider.
• Defining approaches for preparing, negotiating, closing, and re-evaluating contracts with IT service providers.
• Establishing a win-win culture to promote enduring and successful relationships with the supply base.
• Managing potential operational impacts when transitioning to a new provider.

Representative POMs are described for SRC at each level of maturity.

2Basic

• Practice

  Check that legacy sourcing decisions remain relevant to the IT strategy.

  Outcome

  Previous sourcing opportunities are assessed for value and relevance to current organizational needs.

  Metric

  Percentage of legacy sourcing decisions evaluated.

• Practice

  Within the IT function, apply a consistent process to select IT service providers.

  Outcome

  Transparency and objectivity guide selection of the most suitable candidate.

  Metric

  Percentage of providers selected, using the preferred selection process.

• Practice

  Identify necessary interfaces between the retained organization (people, skills, and so on) and the IT service providers.

  Outcome

  Smoother transitions and ongoing cooperation are facilitated.

  Metric

  Number of defined interfaces between the retained organization and the IT service providers.

• Practice

  Use defined criteria to translate sourcing objectives into contract terms and conditions.

  Outcome

  Expectations of providers can be explicitly managed.

  Metrics

  • Percentage of contracts that are based on an approved template.
  • Percentage of contracts where providers meet expectations during the term of the contract.

3Intermediate

• Practices

  • Mandate standard criteria for selecting the appropriate sourcing model.
  • Such criteria might include, for example, business criticality, capability of the provider, risk associated with physical location, quality, and cost.

  Outcome

  Appropriate sourcing models can be consistently selected, minimizing potentially negative outcomes from sourcing selections.

  Metric

  Percentage of selected sourcing models that have to be changed because they turn out to be inappropriate.

• Practice

  Determine organizational readiness for sourcing, by assessing, for example, the extent of process standardization, the availability of resources and skills, and design of the retained organization's structure.

  Outcome

  The organization's readiness for a sourcing initiative is clarified, and realistic transition plans can be considered before deciding on a sourcing deal.

  Metrics

  • Organizational scope and depth of readiness assessment.
  • Number of recurring issues relating to transition initiatives.

• Practice

  Ensure provider selection processes and criteria regularly incorporate input from the corporate procurement function.

  Outcome

  The selection process can be enhanced by inputs from the organization's procurement function.

  Metric

  Percentage of providers selected with the cooperation of corporate procurement.

• Practice

  Issue guidance on adapting sourcing contracts to reflect the specific requirements and circumstances of each individual sourcing context.

  Outcome

  A standardized approach to managing contract flexibility enables different sourcing objectives to be realized, while contract consistency is maintained within acceptable tolerance levels.

  Metric

  Percentage of sourcing contract templates that are modified within specified tolerance limits.

4Advanced

• Practice

  Require all sourcing decisions to reference the established sourcing model.

  Outcome

  Sourcing decisions are made in a consistent manner, based on a comprehensive set of criteria.

  Metric

  Percentage of sourcing decisions that adhere to the appropriate sourcing model.

• Practice

  Fully integrate IT service provider selection into the organization-wide procurement process.

  Outcomes

  • Full synergies can be realized.
  • Compliance with procurement guidelines is maximized.

  Metric

  Percentage of IT service providers selected using the organization's standard procurement approach.

• Practice

  Consider positive incentive clauses across relevant sourcing contracts.

  Outcome

  Sourcing contracts provide win-win opportunities for the organization and the service provider.

  Metrics

  • Number of innovations jointly realized.
  • Number of chargeable activities not charged by IT service providers.

5Optimized

• Practice

  Maintain continual reviews of sourcing objectives, the scope of services/processes being sourced, and the governance model.

  Outcome

  The adaptation of sourcing approaches to remain current with business needs is encouraged.

  Metrics

  • Frequency of reviews.
  • Percentage of actions completed following each review.

• Practice

  Regularly assess IT service delivery against original business case objectives.

  Outcome

  Results can feed into the process of re-evaluating the sourcing of IT service providers.

  Metric

  Percentage of IT service providers re-evaluated against original business case objectives and contracts.

• Practice

  Continually review the provider selection process and criteria, and their integration with the organization-wide procurement process.

  Outcome

  Synergies are optimized.

  Metric

  Percentage of audit suggestions implemented.

This capability was introduced in Revision 16 as a new critical capability.

It was deprecated in Revision 18.01, being replaced by Sourcing and Supplier Management (18.01).

The following CCs cover topics that are related to SRC in some way:

BPMBusiness Process Management

An understanding of how sourcing arrangements may affect business processes (both within the IT function and across the organization)

CAMCapability Assessment Management

An understanding of (potential) IT capability gaps that may inform sourcing options

CFPCapacity Forecasting and Planning

Scenario modelling and forecasting of IT resources

DSMDemand and Supply Management

Balancing business demand and IT supply including the IT services portfolio

DSMDemand and Supply Management

Forecasts of demand for IT services, some of which may be appropriately sourced externally

ISMInformation Security Management

Security requirements that need to be taken into account in selecting IT service providers

ITGIT Leadership and Governance

Guiding principles for a sourcing governance model between the IT function and third parties

PDPPersonal Data Protection

Guidance for data protection contract clauses and on-going compliance monitoring

RMRisk Management

A framework for managing the business risk in sourcing decisions

SPStrategic Planning

The business and operational strategy, as the context for strategic sourcing decisions

SRPService Provisioning

Managing service performance levels for individual IT services

SRPService Provisioning

Service performance levels for IT services

SUMSupplier Management

Day-to-day management of IT service providers/suppliers, such as assessing performance against SLAs

SUMSupplier Management

Managing suppliers from an operational perspective