A recent Forrester Research study reviewed three years of survey data on large IT outsourcing contracts in Europe. One element of the study compared selective sourcing ­ using multiple specialist service providers to handle various parts of a company’s IT environment ­ with multisourcing ­ a similar approach but with the added element that the user sets up all the service provider contracts in parallel at one time.

European companies regularly use selective sourcing. Between 2004 and 2006, Forrester tracked some 900 large outsourcing contracts. More than 50 of the companies were pursuing a selective sourcing approach, running contracts with two or more providers. A separate Forrester study showed that 84 per cent of large firms pursue a selective sourcing approach to IT outsourcing.
By contrast, multisourcing, as defined here, remains rare. Just nine examples showed up in Forrester’s survey, including Dutch bank ABN Amro, and car firm Renault.

The reasons for multisourcing’s rarity seem obvious: it’s harder and more resource intensive compared with signing a global deal with one provider; and suppliers don’t always encourage this approach. But there is a positive side. For an organisation that needs a comprehensive overhaul of its IT delivery without signing a global, single-provider outsourcing deal, multisourcing offers a way to set up a complete service with a consistent strategy and approach. It opens the door to consistently defined service level agreements (SLAs), and a systematically planned approach to vendor governance and management.

If your company sees a potential benefit from multisourcing, then I have three pieces of advice.

First, involve the right internal stakeholders in planning and defining the project. Get everyone behind the approach. If a key figure, such as the finance director, doesn’t fully support this, you’re lost.

Second, consider using an external adviser for planning and execution. Firms such as TPI and Deloitte have been closely involved in several of the nine multisourcing deals mentioned. These experts can help identify potential pitfalls, sort out vendor realities from marketing blurb, and assist through the complex steps of vendor selection and contract negotiation.

Third, take time to examine the multisourcing credentials of the service providers. Challenge them on issues, such as how they manage common SLAs with other service providers ­ right down to operating with a common configuration management database, and integrating trouble ticketing processes. A few firms, including EDS and Capgemini, have begun to build internal disciplines to co-ordinate better with peers in this way. It pays to work with those who have proven capability.

Andrew Parker is vice president and research director at Forrester Research. His report ‘Outsourcing Providers Need A Strategy Rethink To Address Buyers’ Shift To Multisourcing’ is available to Computing readers free of charge at:
www.forrester.com/computinguk