Will the Industry Analyst's Micro-Definition of Sourcing Ever Change?

I remember the first time I read a Gartner report at FreeMarkets. Our account representative at the time pointed out a new report dedicated to examining "strategic sourcing" -- something that would be right up our alley. He referred me to a printed brief (this was back before online access was a regular thing) and suggested it might be worth sharing with the rest of my organization. Little did I know at the time that the subject that Gartner -- and the other industry analysts, for that matter -- defined as "strategic sourcing" was an extremely narrow definition focused on the procurement of IT hardware, services, and support, almost entirely from the perspective of the CIO (vs. that of procurement). Unfortunately, this IT-centric view of strategic sourcing persists, as analysts continue to mistakenly refer to the universe of IT spend as the broader concept of strategic sourcing. A recent Forrester blog perpetuates this misconception of the broader role of sourcing in the enterprise.

Now, not to blame Forrester entirely -- I believe Gartner instigated this false label, and perpetuates it to this day in the bowels of its IT coverage. Moreover, there may be something we can learn from the marginalization of the broader role, based on what the analysts have to say. For example, a Forrester analyst suggests that there are three distinct "sourcing archetypes" that define organizational models. Under the first type fall the firefighters, who represent sourcing teams that "push for discounts and focus on economies of scale through aggressive supplier consolidation wherever possible." The second type are represented by "explorers" who "direct their energy into investigating a host of emerging options for IT service delivery … as they investigate how to use some of these new pricing models, SaaS offerings, BPO, managed outcomes etc. to radically shift the cost profile of service delivery." In other words, it's this group that is attempting to redefine the cost structure of IT by getting more creative with sourcing efforts. The third and final group, according to Forrester, are the "builders" who "are engaged in sinking the foundations that underpin a profound shift in operating model architecture, IT/business redesign, and supplier engagement."

Obviously, even if these definitions and labels reflect one researched opinion about IT-sourcing philosophies, they fail collectively to provide a flavor of the broader types of archetypes playing a role in procurement organizations focused on IT spend, let alone a broader portfolio. The market as a whole would be better served by industry analysts who more narrowly define their definition of "sourcing" and "strategic sourcing" to IT spend rather than assuming their views also apply to broader procurement roles and organizations. Until then, they'll just keep shooting themselves in the foot when it comes to building credibility with business users in buy-side roles (not to mention drawing evil stares in the office from those that actually cover procurement and sourcing within their own firms).

Jason Busch

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