A new paradign for sourcing – we announce STUPID SOURCING

Yesterday we started covering my presentation to the Sourcing Interests Group (SIG) London Roundtable last week.  It focused on why so many major sourcing projects go wrong.  It seems strange; we can often see in advance just where the problems are going to lie; we have a reasonable understanding of what good practice looks like in sourcing; so why on earth do so many deals still disappoint? And what can we do about it?

So, to both explain the problem, and suggest one new way in which we may be able to partly address it, we then proposed our new paradigm for Sourcing. We believe it could revolutionise how we look at Sourcing, and we call it...

STUPID SOURCING!

Here is our (not yet signed off) Wikipedia definition...

STUPID SOURCING is: a term used to denote sourcing activities and exercises that are destined to fail from the beginning because of their failure to take into account the key requirements of successful sourcing projects.

And here is our thinking on why it happens – we believe there are three causes of Stupid Sourcing.

Ignorance – participants genuinely don’t know what they should be doing.

Wilful disregard for good practice (often through arrogance, external pressures or indeed pure stupidity).

Corrupt purposes – bribery, lying to achieve bonuses, etc.

Now, you may think this is a bit of a joke. But actually, we’re serious about this. One of the reasons we still see too much bad practice is that it doesn’t get exposed. Why did so few people say, early on in the NHS IT programme, “this is bound to fail – stop now”!

Perhaps if they’d had a commonly understood shorthand way of expressing that view, that didn’t come over as a political position? If enough experts in the field had said,

“Stop  – this is STUPID SOURCING”!

Then might someone have listened?

We would like to hear interviewers on the Today programme saying, “but Minister, isn’t this going to end up as another example of Stupid Sourcing”?  We’d like analysts at company annual meetings to challenge the CEO when some mega-outsource contact is mentioned, and say “so how will you ensure this doesn’t end up as Stupid Sourcing”?

We also need training and education on both the buy and sell side to make sure that all parties understand what good sourcing looks like; but if we can make Stupid Sourcing part of the vocabulary, perhaps it will encourage people not to fall into the same old traps. Because, as we pointed out yesterday, there is best practice that if followed, can pretty much guarantee that major sourcing exercises and processes will succeed.

And if anyone has any examples of Stupid Sourcing, then do let us know. Nothing libellous please, and you can comment directly here or you can email me privately at psmith@spendmatters.com.

Voices (8)

  1. David Orr:

    Somerset council takes back services from Southwest One …

    http://www.guardian.co.uk/government-computing-network/2012/mar/05/somerset-southwest-one-service-transfer?newsfeed=true

    I nominate Somerset County Council (SCC) for the prestigious award of “Stupid Sourcing” for spending £4m and 3 years to create the controversial joint venture Southwest One with IBM (75% owner) that after another 4 years has:

    a) Led to a loss for local taxpayers of £50m.

    b) Increased local borrowing by £30m.

    c) Implemented an expensive version of SAP that was configured by IBM India and still has fundamental flaws 3 years after a disastrous go live that created £400K of duplicate invoices.

    d) Saved less than £10m, when by now £139m was forecast in savings by IBM.

    e) Was described as “failing”, “inflexible”, “intransigent” in Feb 2012 by the Council Leader.

    f) Left Somerset taxpayers paying for a large number of SAP licenses that is higher than being used and thereby subsidising the Avon & Somerset Police Authority in the Avon areas.

    g) As the Government cuts reduce services and SCC head count, the SW1-based SAP costs remain high & fixed.

    How was this achieved?

    1. At the start of the “procurement”, the former Suffolk County Council Joint Venture (with BT) lead Sue Barnes was appointed Strategic Director in charge of the SW1 procurement, without competitive interview.

    2. The former controversial Chief Exec of SCC Alan Jones declared that the preferred solution was a Joint Venture BEFORE any Business Case or Options Appraisal had been carried out.

    3. The driver for SW1, according the former controversial Chief Exec of SCC Alan Jones, was a “transformation” to take the Council “Beyond Excellence”.

    4. In-house services and their Managers were labelled from the outset as “the Do Nothing option”; “Status Quo”; “No change”.

    5. Beyond aspirational aims of “Beyond Excellence”, the requirements for “transformation” were not specified. This was left to IBM after being awarded Preferred Bidder. They duly decided that transformation would be met by selling SCC a large & expensive ERP IT “solution”.

    6. No baselines were done for existing services prior to contract, so now SCC does not know whether they are getting the same, lower or higher services for our money.

    7. The SCC Client was “thin” & incredibly started with no IT expertise because IBM were a “World Class IT Company” and therefore it was not required!

  2. auxhouches:

    How about the appointment of ALS by the MOJ for translation services?

    ALS’ business model was predicated on being able to provide more efficient management and much lower per hour costs.

    Stupid sourcing meant that:
    * They didn’t check to determine whether the existing supply would accept a a massive cut in pay (they wouldn’t)
    * They didn’t check to see if there was a comparable source of supply that could be used if the current translators took their ball home (there wasn’t)
    * They didn’t consider the on-costs of failing to provide capable translators on-time (much higher than the value of a £8ph translator)

    It wasn’t stupid to outsource this, just stupid not to manage the supply chain.

    1. Dan:

      So they awarded a contract to a relatively small company owned by a failed dragon’s den entrepreneur, and didn’t check that it had the capability to do it…

      Isn’t that what Francis Maude wants us to do all the time?

      1. auxhouches:

        That was bought out by Capita…

        1. Dan:

          because it had won the MoJ contract…

          1. Paul Wright:

            Aren’t they not allowed to buy another company just to access a contract?

          2. Dan:

            (To Paul) Of course; I was just making the point that Capita weren’t on the scene when the contract was awarded – that decision was made purely on the strength of ALS’s bid

Discuss this:

Your email address will not be published. Required fields are marked *