Sourcing IT Through Online Private Markets



GE CIO Gary Reiner is responsible
for GE's massive sourcing efforts:
CNN Money Interview

In the previous posts we discussed conventional outsourcing and the various flavors of Captive Sourcing and their pros and cons.  One of the nifty ways to straddle the best of both worlds is to use a private market.

A private market is essentially a preferred vendor pool where the vendors are invited to bid competitively for the buyer’s business, usually in the form of an online reverse auction.  While more commonly used for commodities buying, electroninc reverse auctions in private markets can be used for many types sourcing. In the IT services outsourcing world, it has been used for buying services very effectively by none other than General Electric since the mid-90s right up to this day.  Sometime back, CNN Money published this interview with the then GE CIO Gary Reiner on this topic.  The interview gives valuable insight into GE's use of IT in the online reverse auction or eAuctions and private markets. Interestingly the CIO was also responsible for GE's overall for buy side strategy for services including IT. Hit the jump to read more.

Captive Sourcing : Can you have your cake and eat it too?





Data Source: WSJ.com article

For some CIOs/sourcing decision makers the risks of traditional outsourcing outweigh the rewards.   They are either too wary of changing the status quo (having an in-house IT) and giving up the proven way of doing business, or have already tried outsourcing and feel that it promises more than it delivers. This is where captive sourcing comes in.

Captive sourcing, or having a fully owned subsidiary where your outsourcing vendor would operate, seems to be the silver bullet that provides the cost advantages without sacrificing control. Many firms have tried captive outsourcing. Have they succeeded? Hit the jump to find out.

   

What exactly is outsourced IT? Its many flavors.

What do businesses really mean when they “outsource IT”?  The video interiew below provides a quick overview of the elements of outsourcing in the context of a small business.

A business can outsource any part of IT that is not considered a core competence or a value adding activity in the long run following the usual “Buy Vs. Make” decision points in strategic sourcing. In an IT / ITES (IT Enabled services) context what does this mean and how do these firms engage? Hit the jump to see.

 

Welcome to Sourcing Secrets.

This site is about one thing: Learning how to make Information Technology work for your business to take it to the next level, or the next ten levels.  Whatever industry your are in today, you are probably already familiar with the love-hate relationship of business and IT. In fact, enterprise IT which used to be the domain of CEOs, CIOs and large corporations in the 70's spilled over to the small and medium businesses by the 80's and '90s, has become a fixture of tiny businesses and even start ups today thanks to a phenomenon called technology / IT outsourcing services.  

“IT outsourcing” has many definitions but it really is an evolving concept. It meant various things from having a hired intern over the summer, experienced freelancers (and elancers) and "staff augmentation" contractors brought into internal IT departments ("insourced") as contingent workers. It eventually came to mean signing multi-year deals worth tens of millions of dollars with a single technology service provider, usually half a world away, the value range being between "out tasking" and "managed services". Now more than ever, it tends to imply you may be “renting” software (and hardware) like a utility that streams into your laptop’s browser from – you guessed it – "The Cloud”. The enterprise IT outsourcing paradigm has transformed itself while changing the way business is done. And just when it seemd to have levelled out, it appears poised for an encore. In fact IT outsourcing on more than one level is a journey rather than a destination, and we hope to savour all these sights and sounds on our way.

If you are an entrepreneur, or a strategist thinking of outsourcing IT, a business manager trying to optimize outsourced IT or an industry affiliate who wants to share your story of success or failure with outsourced IT, this place is for you. This is intended to be a watering hole for peer-to-peer learning with some insider insights from real life engagements over a decade thrown in by "yours truly".

Thanks for dropping by, and thanks for reading. But if you enjoy it the best thing to do is to join the conversation and spread the word.