Multi-vendor outsourcing

Citation

(2004), "Multi-vendor outsourcing", International Journal of Productivity and Performance Management, Vol. 53 No. 3. https://doi.org/10.1108/ijppm.2004.07953cab.002

Multi-vendor outsourcing

According to a recent report from research company Gartner, 70 per cent of enterprises will outsource their operations using more than three sources for service delivery in key areas by 2005. However, Gartner points out some major pitfalls: fewer than 10 per cent will have the appropriate processes and governance structures to effectively manage multiple external service providers that contribute to common enterprise objectives.

“As the number of sources required to fulfil enterprise IT and business demands increases, Gartner has not seen a comparable effort in most enterprises to create organisational structures, apply the necessary management resources, and implement processes to manage this new environment effectively”, said Gartner research director Christopher Ambrose. “As a result, the overwhelming majority of enterprises using multiple service providers repeatedly experience a collision between the interests of these sources, which diminishes the value of the service they provide to the enterprise.”

According to Ambrose, the complicated IT services landscape, combined with competing interests from external and internal sources, encourages “minimum effort over best effort” when managing outsourcing relationships. “Many enterprises have not focused on creating the agile, responsive, flexible organisation necessary to effectively manage the multi-sourced environment, leaving them vulnerable to low return on service value”, said Ambrose.

Gartner has recommended that enterprises quantify the value lost due to poor multi-sourced management practices, identify where gaps exist in their own management, gain executive commitment to change, and develop a structure to manage relationships.