New Category Management Approaches to IT Spending (Part 1)

Computer Weekly recently featured a great guest blog from Deloitte's Bhupinder Sandhu about how IT departments are approaching category management and broader sourcing and procurement strategies. While the full-text of the article can be found here, we'll share some of our key takeaways, beginning with a new approach to working with prime suppliers in a general contractor model for IT.

Here, Sandhu observes that some companies have "recently moved from a single supplier managed service to a layered approach with a Service Integrator, managing a small cluster of vendors." Yet other strategies are also playing into current IT vendor management thinking. To wit, organizations are also "moving toward multi-sourced models with shorter contract durations, increased flexibility and outcome focused commercial models. Others are transitioning from best of breed supplier mixes toward 'Tower-Sourcing'; 'Layered-Source' or 'Guardian Vendor' approaches."

Yet overall, IT organizations are seeking out specialist providers – or those capable of effectively stewarding and maximizing value from a group of specialists – rather than a smaller subset of mega-suppliers. In part, this is due to the fact that, "over time, however, the alignment [in these large deals] between the business and IT became unworkable. Contracts themselves became increasingly irrelevant leading to a breakdown of trust and increasingly tense relationships."

Another reason IT organizations are seeking out more specialized providers is that they're more capable than ever of effectively managing diverse relationships through vendor management approaches that focus as much on the full lifecycle of the relationship as individual areas (e.g., strategic sourcing or performance reviews).

Yet how does this play into the new "integrator" model of IT services delivery? We'll explore this topic in Part 2 of this series.

- Jason Busch

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