Sourcing Interests Group event round-up – and why aren’t we better at Sourcing?

Last week saw the Sourcing Interest Group’s (SIG) second foray into the UK with their London Regional Roundtable.  SIG events like this are more intimate than the big conference type events, and this was a good and successful opportunity for practitioners and a small number of suppliers to get together and talk about major sourcing issues through a mix of presentations and discussion sessions.

The term “sourcing” in this context tends to place the emphasis on major outsourcing type contracts, so delegates at SIG events include not just procurement types but also those responsible for major outsourcing contracts from a budget holder or vendor management angle.

Anyway, over the next couple of weeks we’ll be featuring here some of the sessions and discussions from the two days. That will include I hope the  interesting presentations from the sponsors – PA Consulting, Emptoris, SAP and IG Navigator – and some of the practitioner-led content.

But we’ll start today with my own session from the event, which took as its theme a simple question – why aren’t we better at Sourcing?

I warned delegates that this wasn’t going to be a nice, positive presentation- rather, we would talk about BAD THINGS!  I focused on large outsourcing and “one-off” type contracts, which would include for instance major IT development contracts as well as more traditional BPO outsourcing.  As a profession, we’ve been doing this sort of thing for many years now – CIPS is 80 years old, EDS were formed in 1962, and compulsory competitive tendering was introduced in the UK Government over 30 years ago. So why do we still see so many major contracts end in failure, or at best disappointment for at least one of the participants?

What is particularly surprising is that we see this happening even though we have a pretty good view now of what best practice looks like in terms of sourcing – from the procurement phase through contract management. Yet still things go wrong far too often.

Not picking on the public sector particularly – it’s just that private sector examples tend to be hushed up – but there are some good (or should I say bad) – case studies from both the US and the UK government. We could talk about the NHS IT programme, Department of Transport shared services, Southwest One,  and many others...

Well, logically, why do we have so many disappointments? It must be either the buyer’s fault; or the seller’s fault; or both parties’ fault. We looked in the session then at what causes problems - issues include poor alignment of goals and objectives, too much focus on cost or revenue rather than long term mutual value, and poor communication or contract management.

We also suggested that you can often tell in advance that a contract is going to go wrong. Warning signs like a contract signed with great public fanfare – but in a hurry to hit some deadline around internal budgets or to impress investors prior to the release of poor results.

So, if we can see where things are going to go wrong, and we have a reasonable understanding of what good practice looks like in sourcing, then why on earth do so many deals still disappoint?

Well, stay tuned, because tomorrow we’ll tell you! And we'll present our exciting new sourcing paradigm.....!

First Voice

  1. Steve:

    Dangerous commenting at this stage, when this is just the teaser… but whenever people say ‘better’, my usual response is ‘please define “better” ‘. (eg, when an engineer is choosing a ‘better’ component… is this a ‘better’ that anybody will pay more for?).
    In some of the examples chosen above, the root cause may be differing views of what ‘success’ looks like.

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