Future of Sourcing - Request for (RFx) https://futureofsourcing.com/tags/request-for-rfx en Comparing Outsourcing Companies: How to Simplify the Process https://futureofsourcing.com/comparing-outsourcing-companies-how-to-simplify-the-process <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/xchecklist-business-comparison-624x325-624x325.jpg.pagespeed.ic_.cAUDvE_FtC.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/xchecklist-business-comparison-624x325-624x325.jpg.pagespeed.ic_.cAUDvE_FtC.jpg" title="Comparing Outsourcing Companies: How to Simplify the Process" class="colorbox" rel="gallery-node-992-SmtiVW56B1Q"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/xchecklist-business-comparison-624x325-624x325.jpg.pagespeed.ic_.cAUDvE_FtC.jpg?itok=bdud4-em" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Measuring the value of an outsourcing company for your own service requirements can be a surprisingly disorienting task to complete. But beyond its complexity, it also involves a lot of responsibility. Your decision is likely to affect your organisation&rsquo;s strength and efficiency for the upcoming months, if not years. Making a good choice will mean the right level of support that will help your organisation grow. But selecting a wrong partner can be highly detrimental to the health of your business.</p> <p>The right company to use depends on a large number of criteria that are typically assessed through a Request for Information (RFI). Once every outsourcing company returns their responses to your RFI, it is important to thin out the selection to only those with whom you would, potentially, be interested in working. Then, it&rsquo;s comparison time. This is where the difficulties begin. How do you make a reliable comparison to ensure nothing is missed?</p> <p>Without doubt, the assessment of potential nearshoring or outsourcing suppliers is a process best conducted as carefully as possible to minimise the risk of a failure for your business. Topic areas such as the infrastructure, experience and location (to name a few) of each of your potential partners all need to be deliberated over and assessed with almost equal measure.</p> <p>When comparing a number of suppliers, it is best to work with a checklist which contains all criteria that matter to your organisation (see below for examples of areas you might want to consider). Based on responses to RFI, each supplier would then be awarded points on a numeric rating system (e.g. where 1 means &lsquo;does not meet the requirement&rsquo; and 10 &lsquo;fully meets the requirement&rsquo;). This will keep your assessment reliable, consistent, and most importantly, it is the easiest way to navigate potential partners. This number-based comparison/checklist system is best actualised by using spreadsheets.</p> <p>Through this spreadsheet technique, the user should map out a range of criteria to assess when comparing IT suppliers. Some of these include:</p> <p style="margin-left:22.5pt;">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Overall company:</strong><br />This topic should cover the company&rsquo;s length of time in operation, legal and regulatory compliance, their financial stability and reputation. Consider their organisational culture &ndash; are they a good fit for you? Are they able to deliver the skills you need? Beyond thinking about your current needs, try to fast forward into the future and establish what skills or services you may need in a couple years&rsquo; time &ndash; would they be able to deliver them?&nbsp;&nbsp;</p> <p style="margin-left:22.5pt;">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>People:</strong><br />It is the people, not the company as such, who will work with you on a day-to-day basis, so it is worth getting to know them as much as possible at this stage. The attitude an employee has towards their employer is very important as a frustrated employee may in practice mean a demotivated member of your outsourced team. Look into staff attrition rates, employee benefits and personnel retention activities. You may also want to check employee engagement in company life on the company blog and on social media.&nbsp;</p> <p style="margin-left:22.5pt;">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>The Company&rsquo;s Capabilities:</strong><br />This area covers the company&rsquo;s technical skills, including whether it can or cannot operate across a variety of platforms, technologies and languages. This may include project management, business analysis, requirements gathering, process expertise, language skills and domain knowledge. It is also worth considering the methodologies and frameworks used by each company.</p> <p style="margin-left:22.5pt;">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Experience and Reliability:</strong><br />This is where you assess whether the experience of the outsourcing company is in line with your needs. Look for examples of previous successes where the technology has been implemented, the company demonstrated technical skills, repeatable delivery and proven methods and tools. In addition to case studies available on the suppliers&rsquo; websites and the information provided in the responses to RFIs, it might also be a good idea to call their previous or current clients.</p> <p style="margin-left:22.5pt;">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Infrastructure:</strong><br />Here, the size, quality, and modernity of the premises are analysed. Assessed factors will include the availability of space (such as meetings rooms and parking facilities), modern equipment, and perhaps most importantly, the infrastructure&rsquo;s stability. It is also worth investigating whether the buildings belong to the outsourcing company &ndash; as this is more stable in terms of work continuity than rented properties.</p> <p style="margin-left:22.5pt;">6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Communication:</strong><br />Effective communication is essential to the success of any project. This is all the more important when distance between two companies comes into play. As such, an outsourcing comparison spreadsheet should consider things which support communication, such as knowledge of common language, cultural proximity, overlaps in working hours and standard communication channels (e.g. Skype, teleconferencing or video calling), preferably those used at your company.&nbsp;</p> <p style="margin-left:22.5pt;">7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Commercials:</strong><br />Questions you should consider in the &lsquo;commercials&rsquo; category include: Is the supplier&rsquo;s commercial model relevant to the needs of my organisation? What IP and copyright policies do they have on board? Are their processes streamlined for the ease of doing business? Would the cooperation be cost efficient?</p> <p style="margin-left:22.5pt;">8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Location:</strong><br />When thinking about locations of your shortlisted IT outsourcing service providers, consider the geopolitical and economic stability of the countries and how easy it would be for you to visit them (and vice-versa). The country&rsquo;s ranking in terms of outsourcing, its level of education, labour costs, and whether the company is covered by wider legalisation, standards and laws (such as the European legislation) should all be compared, as each can have a potentially huge impact on the outsourcing services provided to you.</p> <p style="margin-left:22.5pt;">9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Risk Management:</strong><br />This category involves an assessment of each outsourcing company&rsquo;s business continuity policies, and (perhaps more importantly) the mechanisms in place that both prevent and amend disasters. Other factors to address include audit controls, the security of data, equipment and buildings and the transparency of the company.</p> <p style="margin-left:22.5pt;">10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Any Additional Considerations:</strong><br />While this list may seem extensive already, there are always final elements to take into account before a final decision on the outsourcing company for you can be made. Would a pilot project be possible? What extra benefits and services are on offer? Even questions such as &lsquo;Can I trust them?&rsquo; and &lsquo;Will I learn anything from them?&rsquo; are important to ask yourself.</p> <p>Selecting an IT partner for your business is a serious, long-term decision with a lot of complex information that needs to be collated and analysed. In order to confidently select your perfect technology partner, an ideal IT supplier comparison tool should first and foremost be transparent and user friendly. The reader should undoubtedly be able to scan through the checklist quickly and without great effort. But if the information is both categorised and compared according to numerical values, and allows for reporting, then your boss and your colleagues (the people who will also be making the big decision) should have no trouble making their mind up either. Beyond supporting your decision, such a tool can be later integrated into your standard supplier selection process. But most importantly, it will help you make the whole process a little less daunting.</p> <p>&nbsp;</p> <p>&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/governance" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Governance</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/innovation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Innovation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/information-technology-it" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Information Technology (IT)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/request-for-rfx" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Request for (RFx)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/risk-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/transformation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Transformation</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Comparing Outsourcing Companies: How to Simplify the Process - Future of Sourcing" addthis:url="https://futureofsourcing.com/comparing-outsourcing-companies-how-to-simplify-the-process"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div> Fri, 15 Sep 2017 21:26:00 +0000 Jaroslaw Czaja 992 at https://futureofsourcing.com How to Ramp Up Your Sourcing Strategy With the Right Provider https://futureofsourcing.com/how-to-ramp-up-your-sourcing-strategy-with-the-right-provider <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/sourcing-strategy-624-624x325%20%281%29.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/sourcing-strategy-624-624x325%20%281%29.jpg" title="How to Ramp Up Your Sourcing Strategy With the Right Provider" class="colorbox" rel="gallery-node-714-SmtiVW56B1Q"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/sourcing-strategy-624-624x325%20%281%29.jpg?itok=bbKJco4b" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p style="margin-top: 0px; margin-bottom: 10px; outline: 0px; font-variant-numeric: inherit; font-stretch: inherit; font-size: 12px; line-height: 18px; font-family: Arial, arial, sans-serif; color: rgb(85, 85, 85);">More and more companies are using strategic sourcing platforms as a fulcrum for digital transformation within the department (and the enterprise as a whole, but that&rsquo;s another story for another day). How? By working with the right partner, sourcing can unleash its full potential; it becomes simple, efficient and most importantly, is able to make a larger impact across the enterprise.</p> <p style="margin-top: 0px; margin-bottom: 10px; outline: 0px; font-variant-numeric: inherit; font-stretch: inherit; font-size: 12px; line-height: 18px; font-family: Arial, arial, sans-serif; color: rgb(85, 85, 85);">eSourcing vendors support the planning, assessment, and performance&nbsp;management of companies&rsquo; procurement processes. In fact, a&nbsp;<a href="http://searchfinancialapplications.techtarget.com/news/450415181/Report-rates-e-sourcing-spend-analysis-and-contract-management-tools" style="outline: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit; color: rgb(189, 33, 36); transition: all 0.3s ease 0s;" target="_blank">recent Gartner survey</a>&nbsp;found that sales of strategic sourcing application suites are expected to double within the next five years.</p> <p style="margin-top: 0px; margin-bottom: 10px; outline: 0px; font-variant-numeric: inherit; font-stretch: inherit; font-size: 12px; line-height: 18px; font-family: Arial, arial, sans-serif; color: rgb(85, 85, 85);">Buyers and suppliers reap the benefits of a strategic sourcing provider. Running sourcing events through an eSourcing solution empowers streamlined communications, clear requirements and apples-to-apples comparison &mdash; putting suppliers on an equal playing field and helping buyers make the right selection.</p> <p style="margin-top: 0px; margin-bottom: 10px; outline: 0px; font-variant-numeric: inherit; font-stretch: inherit; font-size: 12px; line-height: 18px; font-family: Arial, arial, sans-serif; color: rgb(85, 85, 85);">Let&rsquo;s take a closer look at what strategic qualities make for a great eSourcing vendor:</p> <p style="margin-top: 0px; margin-bottom: 10px; outline: 0px; font-variant-numeric: inherit; font-stretch: inherit; font-size: 12px; line-height: 18px; font-family: Arial, arial, sans-serif; color: rgb(85, 85, 85);"><strong style="outline: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Innovative Products</strong><br style="margin: 0px; padding: 0px;" />Because these platforms replace the use of antiquated collaboration methods, like spreadsheets or email, the first quality to look for in a strategic sourcing provider is a collaborative, easy-to-use product &mdash; and one that contributes to your enterprise&rsquo;s competitive edge. Look for an established vendor that frequently upgrades its platform; this means that it is constantly working to address and meet its customers&rsquo; needs. After all, technology is developing at the speed of light (or at least it feels like that!), so you need a platform that can quickly respond to and take advantage of that.</p> <p style="margin-top: 0px; margin-bottom: 10px; outline: 0px; font-variant-numeric: inherit; font-stretch: inherit; font-size: 12px; line-height: 18px; font-family: Arial, arial, sans-serif; color: rgb(85, 85, 85);"><strong style="outline: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Robust Supplier Network</strong><br style="margin: 0px; padding: 0px;" />As a sourcing leader, you&rsquo;re probably all too familiar with the often time consuming and tedious task of compiling possible suppliers. By choosing an eSourcing vendor that has a robust network of credible suppliers, you can reduce or even eliminate this step &mdash; and discover a wealth of new suppliers that you may have never found otherwise. A great eSourcing vendor will also give you the opportunity to compare these potential suppliers &ndash; and give them the crucial information, such as pricing requirements or product details &ndash; so you can find the ideal fit for your company&rsquo;s needs.</p> <p style="margin-top: 0px; margin-bottom: 10px; outline: 0px; font-variant-numeric: inherit; font-stretch: inherit; font-size: 12px; line-height: 18px; font-family: Arial, arial, sans-serif; color: rgb(85, 85, 85);"><strong style="outline: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Easy-to-Use Platform</strong><br style="margin: 0px; padding: 0px;" />If you&rsquo;re still sourcing through spreadsheets and disparate emails chains, you&rsquo;re putting yourself through unnecessary torture! The best eSourcing platforms are often the simplest. Look for one that has high adoption and low ramp-up time &mdash; again, for both buyers and suppliers &mdash; with a full suite of capabilities, from RFx creation to reverse auctions and everything in between. A platform that focuses on speed and efficiency can help your business stay competitive and save money.</p> <p style="margin-top: 0px; margin-bottom: 10px; outline: 0px; font-variant-numeric: inherit; font-stretch: inherit; font-size: 12px; line-height: 18px; font-family: Arial, arial, sans-serif; color: rgb(85, 85, 85);">With the right tools, sourcing can make a massive impact across the enterprise &mdash; and the ideal strategic sourcing provider is a critical partner that can help you achieve that. When a provider has an easy-to-use platform, enhances collaboration, and centralizes data, your company will experience a huge benefit in terms of the efficiency and effectiveness of your procurement processes &mdash; and these improved sourcing practices will bring savings that go straight to your bottom line.</p> <p style="margin-top: 0px; margin-bottom: 10px; outline: 0px; font-variant-numeric: inherit; font-stretch: inherit; font-size: 12px; line-height: 18px; font-family: Arial, arial, sans-serif; color: rgb(85, 85, 85);">Need help finding the strategic sourcing platform that&rsquo;s perfect for your business? Check out some emerging vendors in the space from&nbsp;<a href="https://www.gartner.com/doc/3714222/cool-vendors-procurement-sourcing-technology" style="outline: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit; color: rgb(189, 33, 36); transition: all 0.3s ease 0s;" target="_blank">Gartner&rsquo;s 2017 Cool Vendors in Procurement and Sourcing Technology report</a>.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/account-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Account Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/request-for-rfx" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Request for (RFx)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/managed-services" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Managed Services</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/innovation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Innovation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/data-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Data Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="How to Ramp Up Your Sourcing Strategy With the Right Provider - Future of Sourcing" addthis:url="https://futureofsourcing.com/how-to-ramp-up-your-sourcing-strategy-with-the-right-provider"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div> Sat, 08 Jul 2017 02:19:51 +0000 Chris Crane 714 at https://futureofsourcing.com Reverse Auction: Friend or Foe? https://futureofsourcing.com/node/711 <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Reverse-Auction1-624x325.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Reverse-Auction1-624x325.png" title="Reverse Auction: Friend or Foe?" class="colorbox" rel="gallery-node-711-SmtiVW56B1Q"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Reverse-Auction1-624x325.png?itok=rn79Ie37" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Procurement organizations have been using reverse auctions in sourcing events for decades as a means to reduce spend, introduce new vendors into the supply base and remain competitive in the market. While reverse auctions have flourished since the mid 1990&rsquo;s, they have also been heavily scrutinized. Trends such as these have forced suppliers to adapt to competitive business practices or become inconsequential. As procurement tools become more streamlined, practices like reverse auctions are more commonplace in sourcing events; however, they continue to harbor negative connotations. Amidst this controversy, buyers and suppliers continue to see benefits, but the myths surrounding this mode of buying power prevail:</p> <p><strong>Myth 1 &ndash; Reverse auctions damage the buyer-supplier relationship.</strong> Traditional stigmas surrounding reverse auctions often portray the buying organization as a villain preying on the competitive nature of suppliers vying for contention to successfully bid on a sourcing event. While this may have been the case in the early stages of reverse auction sourcing events, suppliers and buyers alike have become increasingly comfortable with the technology. Buying organizations will often alleviate any apprehensions a supplier is having about participating in the reverse auction environment by fostering communication between the firms, educating suppliers on the methods and tools used before a sourcing event takes place, and using 3rd party hosts to administer the event. Once the auction is complete, firms will publish results and ask for feedback to continue perfecting the process.</p> <p><strong>Myth 2 &ndash; Buying services are not suitable in a reverse auction platform.</strong> Service providers often provide services that are more personal and more difficult to define than industries that sell goods, which elicits the idea that reverse auctions may be more challenging to define and potentially offend service providers. While reverse auctions are primarily used to procure commodities, with proper parameters and preparations in place prior to the opening of a sourcing event, savings on services can be achieved. The most successfully executed reverse auctions for services place a greater emphasis on the meticulous creation of the RFx and clearly define the details and scope of the buyer&rsquo;s requirements. The service industries that often see the most positive outcomes using this platform include 3rd party logistics, marketing and advertising and warehousing. For a real time look at how the reverse auction process can benefit a services firm, see the graph below highlighting an actual sourcing event for a Travel and Expense Automated Software Solution. (Note that suppliers of this event were given a very comprehensive 100 question survey prior to the auction):</p> <p><a href="http://outsourcemag.com/wp-content/uploads/2017/06/Lynn-Barrasblog.png" rel="attachment wp-att-22050"></a></p> <p><strong>Myth 3: Reverse auctions only allow for a one-time cost savings.</strong> Although historical data shows that the highest cost savings are realized when a buying firm enters a reverse auction for a particular good or service for the first time, there is incremental value to be gained beyond a first event. Over subsequent events, the firm will typically see their cost savings yields diminish. While this trend appears to negatively impact the buying party, the reverse auction process actually allows firms to discover the true current market price of goods and services. Not only does this type of procurement by buying parties influence future sourcing events in a positive way, it is an incredibly creative way to keep suppliers honest.</p> <p><strong>Myth 4: Price is paramount.&nbsp;</strong> As with most sourcing events, the incentives associated with cost reduction and cost avoidance seem obvious. However, other motivational factors are buried in the notion that reverse auctions are all about the price. Champions of reverse auctions know that successes can be realized and measured in the relationships gained from quality suppliers that have not been identified prior to the sourcing event. Allowing competitive suppliers to participate opens the door for vendors that have not been considered before. Other non-price attributes leading to a successful reverse auction include building buyer-supplier relationships, reliability of delivery and discovering higher quality products and services. To highlight this idea, one buyer was quoted saying, &ldquo;For me, a mere price reduction does not mean a successful auction. A successful auction entails that we have, besides some type of cost reduction, a good vendor that can service our needs, quality of service, and a vendor that is willing to work with us in order to have a relationship with us; for example, using electronic capabilities to enhance our relationship.&rdquo; This argument is confirmed as we see buyers including terms in the RFx that explicitly state that the lowest bid will not necessarily be awarded the business.</p> <p><strong>The future of reverse auctions</strong></p> <p>Reverse auctions are here to stay. We continue to see an increase in the number of firms using 3rd party reverse auction hosting companies to add value to sourcing projects. There will continue to be use for this tool that is not primarily based around cost savings for purchasing organizations. In fact, buyers are using this tool in more sophisticated ways, ensuring that a larger supplier base is considered, the quality of goods and services are highly scrutinized and overall value is continually added to a firm&rsquo;s purchasing power. This is being accomplished through detailed analysis and research preparation before an RFx is delivered to maintain consistently positive results. In fact, a former director of government affairs for a leading medical supplies firm, was quoted saying &ldquo;Unless the requirements are extremely detailed and specific as to what they&rsquo;re looking for, the [buying firm] is going to get a cheap price and probably a cheap-quality product.&rdquo;</p> <p>Reverse auctions will continue to benefit both buyers and suppliers alike, and will remain a prevalent option for a sourcing strategy of both goods and services. &nbsp;Reluctance to use reverse auctions could mean your firm will quickly fall behind. &nbsp;Organizations must continue to ask themselves, are reverse auctions a friend, or a foe?</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/data-analytics" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Data Analytics</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/automation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Automation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/cost" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Cost</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/tools" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Tools</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/request-for-rfx" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Request for (RFx)</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Reverse Auction: Friend or Foe? - Future of Sourcing" addthis:url="https://futureofsourcing.com/node/711"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Thu, 29 Jun 2017 23:30:55 +0000 Phil Przeklas 711 at https://futureofsourcing.com https://futureofsourcing.com/node/711#comments Contracting for emerging technologies: change with the changes https://futureofsourcing.com/node/660 <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/xPat-Geary-Aug-2016-1-after-oNexus-420x215.jpg.pagespeed.ic_.2FEK7TqhTe.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/xPat-Geary-Aug-2016-1-after-oNexus-420x215.jpg.pagespeed.ic_.2FEK7TqhTe.jpg" title="Contracting for emerging technologies: change with the changes" class="colorbox" rel="gallery-node-660-SmtiVW56B1Q"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/xPat-Geary-Aug-2016-1-after-oNexus-420x215.jpg.pagespeed.ic_.2FEK7TqhTe.jpg?itok=B6CZ76b-" width="420" height="215" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Emerging technology services have revolutionised the sourcing industry. These disruptive technologies like autonomics, interface technologies, big data analytics and other computing technologies have permitted smaller companies to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they may exceed the needs of some segments and ignore the needs of others.</p> <p>Disruptive new entrant providers begin by successfully targeting those overlooked segments, gaining a foothold by delivering more suitable functionality, and frequently at a lower price. Meanwhile the incumbent providers, chasing higher profitability in more demanding segments, may not respond as vigorously. Entrants then move upmarket, delivering the performance that incumbents&rsquo; mainstream customers require, while preserving the advantages that drove their early success.</p> <p>From a customer perspective, adopting emerging technologies can give rise to a number of challenges, especially around the completeness of the solution and the contracting risk profile. New emerging technologies, at this point, are relatively inflexible. Products are sold on an &quot;as is&quot; basis with as few guarantees as possible, thereby arguably delivering limited value compared to more traditional solutions but with an increase in risk to the customer. Cybersecurity is the one we read about every day.</p> <p>Whereas a customer might previously have outsourced all of its IT infrastructure to a single provider, for (let&#39;s say) a term of up to 10 years, now customers are utilising public cloud arrangements with the likes of Amazon Web Services and Microsoft and are combining this with a private cloud for their very sensitive data - the theory being that customers are using the public cloud for their public website and the private cloud for sensitive data like credit cards.</p> <p>They are engaging (and asking other providers to engage with) a cloud integrator who integrates the public cloud, the private cloud and managed services. At the same time they are investing in interfaces with companies for social mobile, internet of things and other digital age platforms that is necessitating the addition of a security as a service, and generating great data which is being analysed in a data warehouse.</p> <p><strong>Is the traditional approach to sourcing fit for emerging technology services?</strong></p> <p>There has been an historical dependence on prescriptive RFP models, and the assumption is made that customisation is available. This model does not apply with digital age service providers. Comparisons are not possible and customers have an expectation that they will receive more traditional (risk-averse) contract terms versus new flexible contracting terms.</p> <p>Customers are having to accept more risks than they have before. Under the more traditional model, customers argued to shift risk on to the supplier because the supplier was the &quot;expert&quot; and the customer was in a position to enter into a very bespoke arrangement - but this is not the case with emerging technology services. Instead customers are buying more standardised services and having to take more risk which should be understood and mitigated.</p> <p>Historically there has been an expectation that services will be sourced through established channels, for example, through a combination of the legal, finance and procurement functions. Instead we are frequently seeing rogue contracting where individuals or business units enter contractual relationships with providers independently of these established practices because of the simplicity and ease with which you can purchase these services through the internet.</p> <p>As a result, its more challenging than ever before to truly do an accurate comparison which used to be the objective of a sourcing RFP process because many of the digital age providers offer solutions which have diverse capabilities.</p> <p><strong>Changing assumptions on contract terms</strong></p> <p>Similarly yesterday&#39;s contract templates are unlikely to meet customer&#39;s needs when contracting for emerging technology services or even integrated services where there is a traditional service with a digital age component.</p> <p>The traditional assumption is that services will be performed by people and much of the contract is based on that assumption. However, it is more likely now that services will be performed by computer with robotic process automation and cognitive computing. Neither assumption is completely accurate. Traditional services have long been performed with a healthy dose of computing and digital labour has to be monitored and fixed by people. It isn&#39;t the combination that&#39;s at issue, but the mix has shifted greatly.</p> <p>Pricing was previously based primarily on inputs or based on specific tasks being performed. With emerging technologies, pricing is more likely to be based on access to fixed infrastructure. Much of the value has now shifted to the data being generated by the service - not necessarily having an internet of things device but having access to and the rights to use that data.</p> <p>The traditional assumption is that customers wanted long-term contracts. However, the emerging technologies are causing solutions to change. Providers may not be sure they will be able - or want - to provide the same services for lengthy periods, and customers want the flexibility to contract the newer, better, cheaper solution when it becomes available.</p> <p><strong>A &quot;risk-based&quot; approach</strong></p> <p>To protect customers, contracting must become even more &quot;risk-based&quot;. It may not always be possible or appropriate for customers to contract on their standard terms (that may be comprehensive and cover the risks associated with a traditional sourcing relationship). Therefore, customers should perform a gap analysis of its standard terms versus what the provider is offering.</p> <p>Customers should create standard contracting policies, for example, a cloud policy risk assessment tool which would identify preferred provisions to suit an organisation&#39;s risk appetite. Such a policy would also identify &quot;fall back&quot; positions and a &quot;walk away&quot; position. This road map to negotiations keeps organisations within the boundaries of its particular policies as assessed against its appetite for risk &ndash; and provides a streamlined, cost-effective approach to negotiations with providers. If customers insist on negotiating and using their own contract terms, we recommend using short, plain English templates that offer the flexibility required to suit the new dynamic sourcing relationship.</p> <p><strong>Are there specific legal risks?</strong></p> <p>It is critical for customers to prevent inadvertent disclosure of confidential information or trade secrets by permitting use of customer data in &quot;big data&quot; analysis. Big data is helpful and also valuable &ndash; providing you own it. Customers should consider what party will monitor and have the right to manipulate it. This should be expressly addressed in the contract terms, in favour of the customer. Cyber and privacy law are big areas of compliance that should be expressly addressed in the contract terms. Compliance is key, as breaches can be costly to the organisation, both financially and on a reputational level. Delineation of obligations must be addressed and adequate measures prescribed, adopted and enforced.</p> <p><strong>What happens once the contract is signed?</strong></p> <p>Things can go wrong quickly if a traditional approach is taken to contracting for emerging technology services.</p> <p>For instance, each new emerging technology services provider will require to be integrated into the overall platform. Such integrations require custom work because service levels and the support models from the services offered by the providers all vary. The services introduce new integration points and new potential points of failure of both service and security and there is also an increased risk of value which increases the need for increased mitigation strategies.</p> <p>Other areas of traditional outsourcing arrangements that need to be considered are change and incident management. Consider the complexity which is likely if a customer changes one solution and the consequential impact it may have on others. Similarly with incident management when an incident or fault occurs, it might take more time to fix given that there are more parties to contact to find out the source of the problem before steps can be taken to resolve it.</p> <p>Governance can be timely and costly. The low-cost model of most emerging technology services providers assumes that face to face meetings with customers are not accounted for, which is unlike traditional contracts where specific functions are set up for regular reporting relationships. It may be difficult to marry the emerging technology services providers routes to resolution with their more traditional counterparts. Often with emerging technology services there can be unexpected or hidden costs if clients don&rsquo;t follow the right sourcing process, and governance is one of these areas of cost.</p> <p><strong>Practical steps to mitigate operational and legal risks &ndash; the sourcing team</strong></p> <p>Customers should consider building an emerging technologies sourcing team, that is cross functional, to understand new technologies, the integration required and how best these technologies can support the business. Legal support is key to avoid some of the risks, and organisations should engage an information security team on what can and cannot be bought.</p> <p>More generally, the sourcing team should include a legal compliance function. Legal compliance for most industries has not been built into products yet. Having compliance representatives there to understand the risks is important. For example, standard contracting terms for emerging technology services are unlikely to address e-discovery or litigation holds. These compliance functions will still be required &ndash; but will inevitably be an additional cost over and above the standard service offering. The sourcing team should include a finance function. Customers may go to emerging technology products for cost savings that never materialise, and the risk is that a team of IT enthusiasts will bring the solution in without doing adequate analysis of hidden costs.</p> <p>Building a specific team requires material investment, but it is an investment which will pay dividends long term. If this is not possible, consider the following:</p> <ul> <li>Consider moving away from prescriptive RFPs and instead use flexible requirements documents, which capture the customer&#39;s own understanding of what its requirements are and what a provider can provide. This should be followed by a gap analysis. Identifying the service gaps aids comparison and facilities a more holistic understanding of the platform, and whether such gaps can be filled with other solutions or whether the customer should consider building its own solution to cover a gap.</li> <li>Customers should map the integration points between its organisation and each of its providers. It may also need to map data flows e.g. if a service is procured from a mobile app provider, how will it connect into a relevant database.</li> <li>Determine the financial business case for the solutions &ndash; and ensure any proposal is fully costed.</li> </ul> <p>If these steps are taken, a customer should be able to make an informed assessment of the business risk associated with the implementation of emerging technologies.</p> <p>There is no doubt that emerging technology services are already impact the contracting landscape and there is no question that yesterday&#39;s approach to sourcing is no longer fit for purpose and will not meet today&#39;s needs in terms of contract with these providers. Spend time working on it and updating your polices and creating this new sourcing approach.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/technology" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Technology</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/law" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Law</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/sourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Sourcing</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/request-for-rfx" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Request for (RFx)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/cybersecurity" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Cybersecurity</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Contracting for emerging technologies: change with the changes - Future of Sourcing" addthis:url="https://futureofsourcing.com/node/660"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div> Mon, 20 Feb 2017 22:15:24 +0000 Megan Paul 660 at https://futureofsourcing.com https://futureofsourcing.com/node/660#comments