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Sourcing Decision

A3

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