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What is IT sourcing?

By Allyson Towle
Johannesburg, 31 Aug 2016
Maria Pienaar, CIO, Cell C.
Maria Pienaar, CIO, Cell C.

Prominent members of the IT community delve into the subject of sourcing, procurement and vendor management for the IT department.

What is IT sourcing?

It has come to my attention that there is much confusion surrounding the concept of sourcing in the information technology community. The question of who is responsible varies from organisation to organisation. What sourcing actually means seems to be just as perplexing. And what the benefits of a proper sourcing strategy for IT is only now being mulled over.

Is it just better supply chain management? Is it procurement management? Is it vendor relationship management? Is it outsourcing to a service provider? Or is it all of these?

The concept of IT sourcing is slowly gaining traction. Supporters of the concept are quick to highlight the benefits, cost saving, and that it is a one-stop solution to a number of procurement problems, such as lack of control and asset management.

Sourcing, procurement and supply chain managers are mandated to reduce expenditure, contain costs, use resources sparingly, improve business process efficiency and even assist with business transformation utilising outsource partners. To accomplish this they have to administer their contracts and SLAs to perfection. As a result they need to negotiate hard. Demand performance. Guarantee 100% uptime. And the suppliers are compelled to come to the party.

IT is without fail one of the biggest expense items on any balance sheet. Taking on the role of IT sourcing manager, procurement manager, vendor manager and the like can be bewildering and the expectations and responsibility placed on you is vast.

As such the ITWeb Events Team has developed an event that speaks to your needs. It has secured a line-up of speakers chosen based purely on their experience in the field and within a corporate environment.

The legal requirements and ramifications

John Giles, Michalsons, and Masego Khutsoane, JSE, will dissect the legal requirements and ramifications associated with the drafting of contracts and service level agreements. They will delve more deeply into aspects such as drafting, negotiating, signing and implementing said contracts and/or SLAs.

Giles says: "Is it your responsibility to draft, negotiate and manage the commercial IT contracts for your organisation (whether IT vendor or user of IT)? It can be a frustrating process, taking months to finalise each contract, especially IT contracts, due to their unique nature. Many organisations are dependent on IT to operate, which makes the contracts regulating the relationship with those IT vendors that provide the IT critical. Good contracts are an essential part of building good relationships, managing risks and avoiding disputes.'

Masego Khutsoane, says: 'It is imperative that you implement sourcing principles when developing ICT contracts and SLA that will bring value, can be enforceable and ensure that both parties both benefit from a strategic collaboration.'

Outsourcing as an enabler

Maria Pienaar, Cell C, focuses on outsourcing as a business enabler. In her opinion enterprises need to transform to digital to stay relevant in their respective markets and come up with new and innovative business models to enable new revenue streams. The CIO is continually pressurised to drive operational costs down while having to meet an increasingly demanding and fast-paced market. These trends are causing a lack of key resources in the market that are increasingly difficult to source. The way enterprises look at sourcing of critical services and the model of how they use these services needs to change. Using the right sourcing strategies enable new innovative and disruptive services that allows the enterprise to compete more effectively in a dynamically changing market.

Collaboration between IT procurement and the procurement department

The changing landscape of the BBBEE codes, the depressed economy, smarter procurement strategies, and the fast pace of change within the tech industry, creates opportunities for closing the gap between IT procurement and the procurement department. Kurt Parker, Alliance for Growth (formerly with GrowthPoint Properties) explains that to achieve this, greater collaboration is needed between the IT and procurement departments in order to achieve maximum value, while working within the legal framework and the governance structures that the organisation, as a 'corporate citizen', is obliged to participate in. He will examine the creation of cross-functional teams, paramount to successful stakeholder engagement.

Lessons learnt

Ronald Flockhart, FirstRand Group, highlights lessons learnt in the sourcing of ICT products and services in South Africa. He notes that this space 'can be challenging for IT leaders as it often involves managing complex requirements, diverse stakeholders and evaluating suppliers on limited information.' He also states that these decisions typically impact organisations long after the sourcing process is completed and it necessary to try and optimising value over the entire life cycle, as such ICT vendor management is required. He will cover both a practical guide to ICT sourcing and vendor management, with a specific focus on what works in a South African context using his considerable experience. We also asked that Celani Ndlovu from Vodacom continue this discussion, he will expose the how to of effective vendor management performance programmes.

Risk management and third parties

As organisations are becoming more dependent on third parties to delivery key services, it is important that they develop appropriate risk management strategies and implement these to improve the current risk maturity levels.

Improving risk management maturity is crucial to protect the organisation from potential impacts which are key concerns at strategic levels of the organisations. Through the risk management identification process, opportunities for cost optimisation are often identified which can be implemented alongside the risk management operationalisation.

Daniella Kafouris and Angela Nicolaidis, Deloitte tackle the subject of improving organisation risk management and at the same time focus on cost optimisation.

The IT Sourcing and Vendor Management Summit takes place at The Forum, Bryanston on Thursday 4 October 2016. For more information contact Allyson Towle, conference director at ITWeb Events at allyson@itweb.co.za or follow this link.

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