Insight

Outsourcing: Flexing for the future

Hybrid outsourcing strategy, multiple delivery models and flexible governance frameworks are key to the success of transformations

Brian C. Lewis

Brian C. Lewis

Director Advisory, Procurement & Outsourcing, KPMG US

+1 303-459-7903

The business expects a lot from information technology (IT) with the ever-accelerating need for technology-enabled transformation. We have so many services, products, solutions, and technologies that need to be delivered—some new and innovative, others in the final throes of the lifecycle. We need the help of third-party providers to meet the numerous needs of the business but worry that providers will only provide services “one way” for the entirety of a three-, five-, or seven-year contract. Product owners are being provided a budget and asked to continuously improve and meet the ever-changing needs of the business; when the investment runs out, they are being asked to provide that same product cheaper—sound familiar? Micro-Sourcing is a modern IT sourcing strategy that contracts for hybrid delivery models and establishes the framework which integrates the approaches so that they successfully coexist in your portfolio and can be utilized when needed. Micro-Sourcing establishes a flexible decision and governance framework that helps you select, switch between, and then operate within hybrid delivery models, each optimized for a particular product. To switch between delivery models, you use standard contract mechanisms to reduce resource charge(s) in one model and in the next model, you use additional resource charges. This can occur as frequently as every two weeks; however, KPMG recommends no more than monthly to balance risk to the business. Do you switch all components of a product to the same delivery model? Yes, to start off as it maintains the privilege of focus a product team needs on the entirety of the product’s ecosystem. 

If you missed our previous blog in this series, visit Outsourcing: Insanity or opportunity? (hint, it's both) (kpmg.us).

Coming up next in our Micro-Sourcing Series…Blog 3: Freedom of choice. The ability to select and switch between the most appropriate, and cost- effective, delivery models and providers is key to success throughout a contract’s lifecycle.