Sourcing Decision
Select the sourcing models that best support the organizational sourcing strategy. For example, this could involve using internal or third-party providers, single or multiple providers, microsourcing, or cloud sourcing.
Improvement Planning
Practices-Outcomes-Metrics (POM)
Representative POMs are described for Sourcing Decision at each level of maturity.
- 1Initial
- Practice
- Best endeavours of available personnel.
- 2Basic
- Practice
- Make sourcing model decisions on a case-by-case basis.
- Outcome
- The organization can achieve its goals in areas such as cost, delivery, and resource management for a specific sourcing project contract.
- Metric
- % of sourcing decisions that are reviewed
- Practice
- Create business cases to evaluate sourcing cost factors.
- Outcomes
- Business cases are occasionally created for evaluating a limited number of sourcing options.
- Sourcing options are changed based on subjective decisions being taken periodically.
- Metric
- % of evaluations that are driven by an objective assessment in a business case
- Practice
- Consider alternative options only when there is a shortfall in the performance of a contracted supplier.
- Outcome
- An emergency backup supplier/service is available should a shortfall in supplier performance occur.
- Metric
- # of available alternative options
- 3Intermediate
- Practices
- Establish a set of common criteria that can be applied when selecting the sourcing model.
- These might include business criticality, protection of the organization's intellectual property, core competencies required, risk exposure, criteria for supplier evaluation, and so on.
- Outcome
- An appropriate sourcing model can be selected on the basis of more objective common business criteria.
- Metric
- # of criteria considered when selecting a sourcing model% of sourcing decisions based on the appropriate sourcing model
- Practices
- Create business cases to evaluate sourcing decisions and operational effectiveness against current business objectives.
- Where appropriate, these business cases should include strategic objectives such as compliance with IT key controls and regulatory certification.
- Outcome
- Business cases are consistently created for evaluating most sourcing options.
- Metric
- # of business case sourcing evaluations yearly
- Practice
- Identify viable alternative options for key services (e.g. exit options to avoid supplier lock-in).
- Outcome
- There is increased flexibility for the key services in the context of a changing business environment.
- Metric
- % of services having alternative options
- 4Advanced
- Practice
- Make all sourcing decisions with reference to an established sourcing model that takes account of market forces and stakeholder feedback.
- Outcome
- Sourcing decisions are aligned with the organization's business environment.
- Metric
- % of sourcing decisions that adhere to the appropriate sourcing model
- Practices
- Establish a re-evaluation process for all key sourcing decisions.
- Base this on an objective, quantified assessment of continued value delivery against strategic objectives, and changing business context. Use business cases in a comprehensive decision-making process for evaluating sourcing options.
- Outcomes
- Sourcing strategy and decisions relating to key services are subject to regular, objective reassessment.
- Business cases include an appropriate balance of quantitative and qualitative aspects.
- Metric
- # of re-evaluations conducted# of criteria taken into account
- Practices
- Ensure the sourcing decision includes an assessment of alternative options and includes an alternative design.
- For example, an organization might consider bringing previously outsourced services back in-house as one way of protecting against supplier lock-in.
- Outcome
- Alternative sourcing options are always considered.
- Metric
- % of services having alternative options
- 5Optimized
- Practice
- Review the sourcing model selection approach continually and refine as appropriate.
- Outcome
- Previous sourcing decisions and changing IT and business strategy can be learnt from.
- Metric
- % of actions completed arising from reviews of the sourcing model
- Practice
- Re-assess all viable sourcing options against current and anticipated future business context; strategy and objectives; and quantified criteria such as value at risk, cost, innovation, and flexibility.
- Outcome
- All current viable alternatives to the selected strategy are identified and assessed.
- Metric
- % completion of actions arising from re-evaluation of the strategy
- Practice
- Maintain up-to-date business cases for all viable sourcing options and use performance data, market research, benchmarking options, audit rights, and other quantifiable data to validate initial business case criteria.
- Outcome
- Alternative sourcing options are practicable at any time.
- Metric
- % of alternative sourcing options being kept up to date