Frank Willems is an expert in IT sourcing and shared services. He will be teaching a course on IT sourcing specialization. The course will cover sourcing strategies and frameworks like the Kraljic purchasing model. It will discuss sourcing options like outsourcing, shared services, collaboration and crowdsourcing. Students will learn how to develop a sourcing business case and analyze different sourcing scenarios. The goal is to understand the basic principles of sourcing and how to define an optimal sourcing strategy.

1. ITSM Specialization Sourcing
2012-2013
Lecture 1: The principles of Sourcing

2. Who is Frank Willems?
Managing Partner Twynstra Gudde and Professor Hanze
University of Applied Sciences Groningen, Innovator in directing
ICT and (crowd)sourcing, TEDx speaker, Founding father of Village
Council rural village of Werkhoven,
Developing Leadership Master #Hanze, Regattasailor,
Jazz lover former 80’s disco DJ
713
2

3. At the end you will know
a lot about sourcing
• How Change Management will be used for sourcing
• How to give value to sourcing opportunities:
– With the Kraljic purchasing model
– With the IT Management framework
– And with the CMMi framework (Services and Acquisition)
• What the sourcing possibilities are
– Outsourcing
– Shared Services
– Collaboration
– Crowdsourcing including the usage of Social Media
• Directing old and new ways of sourcing
3

4. Schedule Sourcing lectures
1. Basic principles of sourcing en defining sourcing
strategy
2. Change management also with personal test
3. Outsourcing as a solution
4. Cloudsourcing
5. The ICT Directing Organization for sourcing and
Shared services as a solution
6. New ways of sourcing (collaboration, crowdsourcing
and usage of social media) and explanaition of the
case for the learning task
7. Presentation learning task
4

5. Goal and agenda lecture 1
Goal: Introduction in basic principles of sourcing,
sourcing strategy and building a business case
Agenda:
1. What is sourcing?
2. Sourcing trends
3. Sourcing strategy
4. Building a sourcing business case
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6. What is sourcing?
6

7. Sourcing definition
The dynamic planning and organizing of
the supporting processes, people,
resources and capabilities,
needed to obtain
the business
goals
7

8. To expoit capacity in a smarter way
(smartsourcing)
Directing
Outsourcing
Collaboration
8

9. Responding to dynamics
Riskmanagement
Flexible response to changing demand and
supply
Innovation
9

10. Diversity in sourcing appearances
Collaboration
Outsourcing
Off shore sourcing
Business process outsourcing
Crowdsourcing
Shared Services
10

11. The traditional IT department
will disappear
Directing, demand and supply
Change
Different competences
11

12. And sourcing demands for
collaboration
Other selection methods
Openness and sharing
Other commitments
12

13. Sourcing trends
13

14. Measures in perspective
Saving potential
Measures at a functional level:
Concentration, integration, mergers,
Take-over or outsourcing Full outsourcing
Shared Services Centre
Integration, mergers and concentration
Measures at a process level:
Outsourcing of parts of the organization
Collaboration and
joint investments
Optimization and standardization of processes
System optimazation
Measures at task level:
Collaboration regarding purchasing, support, etc.
Stopping investments
Orcutting down on current Stopping projects
initiatives
Cutting down on training and learning
Cutting down on engaging external consultants Capitalizing
effects
Short term Medium term Long term
(0,5-1 year (1-2 years (2-5 years)
14

15. Trend # 1 now and the
coming years
Organizing a professional and flexible capacity between
demand and supply (smart sourcing and directing):
• Shortage of excellent IT specialists requires different ways of
organizing capacity
• Suppliers are not yet sufficiently to realize cost reduction and
innovation and ICT must still be delivered at cheaper cost level
• Demand side and principals do not fill in their role well
• ICT has matured and the issue is about functionality instead of
the software and hardware
• There is great need for business frameworks such as
architecture, information architecture and governance capacity
which can be focused
15

16. The IT organization is under
pressure
Great need to change themselves, their business and
control of suppliers:
• There are (too) many models and best practices, where do I
begin?
• Do I have the right people in the house and do I keep them?
• My business does not understand me and shows very little
involvement?
• I keep getting more work from my supplier charged when we
had made good arrangements SLA
• And then how to deal with the outstanding incidents, the
increasing storage problems and the large implementation
project that is failing
16

17. Customer satisfaction on service
providers
Source Outsourcing Performance 2012, Giarte
17
http://data.outsourcingperformance.nl/#

18. Benchmark is important
to collect market information
Source Outsourcing Performance 2012, Giarte
15-11-12
http://data.outsourcingperformance.nl/#

19. Customer satisfaction on medium-sized
infrastructure management higher
Schuberg Philis 83
Simac 80
BT 73
Inter Access 60
Other offshore 56
SBS 55 average = 68%
0 20 40 60 80 100 (%)
Source Outsourcing Performance 2009, Giarte
19

20. Customer satisfaction on end-user
management providers is low
Atos Origin 52
HP 50
Getronics PinkRoccade 50
EDS 45
CSC 44
IBM 38 average = 47%
0 20 40 60 80 100 (%)
20
Source Outsourcing Performance 2009, Giarte

21. Conclusion on trends
• Sourcing is booming and will a stable trend fot the
next decade
• Outsourcing is considered a major disappointment
politely but organizations want still to deal with it as a
solution
• Other sourcing solutions will play more important role
because of disappointment in outsourcing
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22. Sourcing Strategy
22

23. Three models should be
known by heart
• The Kraljic purchasing model
• The IT Management framework
• The CMMi framework (Services and Acquisition)
23

24. The Kraljic Purchasing model
Large added value
What is the extent to which the product / service adds
Leverage Strategic
value for the business
Less added value
Routine Bottleneck
Purchasing Risk
Standard Is it a standard or a specialized product? Specialized
24

25. The sourcing solutions plotted
on this model
Large added value
What is the extent to which the product / service adds
e e
2 generation sourcing 4 generation sourcing
Crowd
sourcing
Leverage Business Proces Strategic
Outsourcing
Business
development
Backoffice
outsourcing e
3 generation sourcing
Shared Service
value for the business
Centers
DataCenter
Facilities
outsourcing
Less added value
outsourcing Routine
Outsourcing Bottleneck
workplace mgt Workinnovation
e Operations e
1 generation sourcing 2 generation sourcing
outsourcing
Purchasing Risk
Standard Is it a standard or a specialized product? Specialized
25

26. The services plotted on this
model
Large added value
What is the extent to which the product / service adds
Leverage Strategic
value for the business
Less added value
Routine Bottleneck
Purchasing Risk
Standard Is it a standard or a specialized product? Specialized
26

27. The IT management framework
Management Directing Service
Aligning Specify strategy Specify strategy SpecifyIT and FM
facilities and services
information supply
and control
Organizing Design and Design and Design, build and
implementation implementation implement IT and
facilities and FM services
information supply
and control
Implementing Use and exploitation Management and Management and
use facilities exploitation IT and
27 FM services

28. The three columns of the
enneahedron
Management Directing Service
Business
Directing
Supplier organization
Aligning
Bepalen strategie Bepalen strategie Bepalen strategie
bedrijfsvoering informatie ICT service
voorziening en
Organizing
Ontwerpen en Ontwerpen en
regie Ontwerpen en
plannen plannen plannen ICT
bedrijfsvoering informatie service
voorziening en
Implementing
Ontwerpen en Beheren en Beheren en
regie
exploiteren gebruiken exploiteren ICT
informatievoozien services 28
bedrijfsvoering

29. The three rows of the
enneahedron
Management Directing Service
Aligning
Bepalen strategie Bepalen strategie Bepalen strategie
View and governance
bedrijfsvoering informatie ICT service
voorziening en
Oganizing
Ontwerpen en Ontwerpen en
regie Ontwerpen en
Planning, organization and
plannen plannen plannen ICT
projects
bedrijfsvoering informatie service
voorziening en
Implementing
Ontwerpen en Beheren en
Implementation and Beheren en
regie
exploiteren service delivery
operational gebruiken exploiteren ICT
informatievoozien services
bedrijfsvoering

30. How to specify what is
outsourceable?
Management Directing Service
Aligning specify strategy and specify strategy
Bepalen strategie
management facilities and
ICT service
information supply
and control
Organizing Design and Design and
Ontwerpen en
This part is usually
implementation implementation qualified for
plannen ICT
(out)sourcing
management facilities and
service
information supply
and control
Implementing Use and exploitation Management and
Beheren en
management use facilities
exploiteren ICT
30
services

31. Cmmi acquisition process areas
in the 9 grid
Management Directing Service
Governance
Aligning specify strategy and specify strategy specify IT and FM
Strategy & Collaboration
management facilitiesPortfolio
Service and services
management
Account Mgt. information supply
Architecture Management
and control
Project Monit. & Control
Organizing Design and Design and Design, build and Management
Prestatiemeting en analyse
implemantation implementation implement IT and Account &
Monitoring quality Demand mgt.
management facilities andSupplier mgt. FM services
Contract &
information Purchase & tenders
supply Supplier mgt.
Demand Management
and control
Implementing Use and exploitation Change management
Management and Management and
management
use facilities exploitation IT and
Demand & failure settlement
31 FM services

32. Practical tip 1: Create a Crisis Plan
This will deliver a lot of information for decision-
making and the business case:
• Clarity about the essential functions of the organization
• Understanding the dependencies of the organization
• Understanding risks, opportunity and the countermeasures
• Translation of vital ICT components in the essential
functions properly (and equal documented)
• Clarity about responsibilities and behavior in emergencies
(and who really has to say)
• And what matters and visibility of the professionalism at this
moment
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33. Practical tip 2: Develop a Pro forma
SLA and Terms of Reference
• On the basis of the crisis plan it is clear what ICT
services are important and which less
• With users it will be clear what requirements they set
for services
• Services are classified in importance for business and
market transparency for completion of appropriate
cooperation
• The quality of the services need to be checked, for
example with CMMi
• The Program of Requirements and the SMART
requirements will be visible and gives guidance in the
selection process
33

34. Building a sourcing business case
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35. Building a sourcing business
case
• What are the posibilities based on the sourcing
descision tree
• What is the current level of quality of the IT
organisation
• What are the possible scenario’s
35

36. Sourcing decision tree
ICT products and services
Business
High Strategisch?
Low
Impact
Riscs
Yes
Manageble?
No Service professional?
No
Stabiel?
Costreduction No
possible?
Yes
Yes
Yes Improvement
possible by collaboration?
No NO Under control?
Yes
Start Hire cacacity external First improve then Uitbesteden
Outsourcing
Zelf
collaboration then outsource outsource
Strategic or Leverage Strategic or Bottleneck Bottleneck or Commodity Commodity
36

37. Develop four businesscases
Make a quantitative and qualitative design for a number of
sourcing opportunities:
• Scenario 0: the current situation qualitatively and quantitatively
• Scenario 1: what it means to professionalize yourselve
• Scenario 2: workplace management, system management and
network management outsourcing
• Scenario 3: workplace management, system management,
network management and application outsourcing
• Scenario 4: professional cooperation with other companies
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38. Experience with the four business
cases
Quantitative average from dozens of
business cases *:
• Scenario 0: yearcosts ICT = current level
• Scenario 1: self professionalize ≅ 10% more expensive
• Scenario 2: workplace management, system management
and network management outsourcing ≅ 3-15% more
expensive excluding transfer of staff
• Scenario 3: workplace management, system management,
network management and application outsourcing ≅ 5-20%
more expensive exclusive transfer of staff
• Scenario 4: professional cooperate ≅ 5-10% cheaper
* Individual situations can be differtent
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39. 15-11-12 Titel presentatie aanpassen 39