Multisourcing equals multiheadaches for IT buyers

With suppliers forming so many partnerships and alliances the IT industry has become extremely complex for buyers who do not have a helicopter view of the market, the principle knowledge management consultant and research associate at Computer Sciences Corporation (CSC), Laurence Lock Lee said last week.

Admitting multisourcing is an unstoppable trend, Lock Lee said buyers are embracing best of breed without recognizing how interlinked providers really are and need to understand that multisourcing can equal multiheadaches.

In an era of multisourcing, Lock Lee said it is a serious error to believe best of breed suppliers will happily collaborate with competitors.

"You may wonder why your vendors won't work together as one happy family; but it isn't likely if they are fierce competitors," he said.

"An understanding of the market ecology will immediately provide a view of companies already working well together so you can get a ready-made team together."

To do this, CSC has created 'market network maps' which use data mining and provide market intelligence on how best to multisource.

There is information on who is buying from whom, how many vendors companies in your industry are using and how they inter-relate.

"It can also tell you if you're sharing the same suppliers as your competitors; this mapping tool provides a view into the intricacies of the market place," he said.

Basically, market place mapping is a new application of an old technique, known as sociograms, and social network analysis (SNS).

Most SNS tools can operate on standard PCs and generate graphics in most of the common formats.

Only last month General Motors announced a $US15 billion multisourcing strategy - one that no longer relied solely on EDS.

The announcement marked a turning point in the adoption of multisourcing strategies.

Forrester Research analyst Robert McNeil said it marks the death of sole-source delivery.

"Using multiple vendors to a greater extent will give GM added flexibility, drive more competition for its business and help it manage the risks associated with outsourcing IT work, he said.

Another decision by GM that could sway other companies is the setting of five-year contracts, which could prompt other companies to set shorter outsourcing deals, he said. GM's initial agreement with EDS, which expires this year, was for 10 years.

(with Patrick Thibodeau)

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