Smart Sourcing vs Outsourcing

By Samuel Greengard

Only a few years ago, CIOs and other business leaders typically turned to outsourcing to trim costs and reduce administrative overhead. However, continuing advances in digital technology are redefining the concept and changing the stakes. In fact, the lines between outsourcing and in-house functions are, in some cases, blurring.

For example, more organizations are turning to a hybrid approach that offloads particular functions or features but retains certain capabilities internally. Marketing clouds and analytics-as-a-service often fall into this category. This more granular approach of outsourcing and insourcing allows savvy CIOs and other executives to adopt a far more targeted strategy for handling specific needs within business and IT.

But this new frontier of outsourcing doesn’t stop there. Some organizations are also focusing on a multi-sourcing approach to address different subcomponents of the same business or IT challenge. Using this method, it is possible to plug in a number of smaller vendors or partners—ideally, best-of-breed providers—to address smaller chunks of the bigger IT puzzle.

What’s further out on the edge? The rise of smart machines as an outsourcing option. Although robots have become a mainstream technology in manufacturing plants—and even in the surgical wards of hospitals—the Internet of Things and Industrial Internet promise to create a new type of outsourcing. In the not-too-distant-future, smart machines could tackle an array of tasks, and it’s quite likely that robots-as-a-service or other fill-in-the-blank-as-a-service type options will thrive.

A New Enterprise Structure

As these different functions emerge, a new enterprise structure will take place. CIOs will be forced to view information technology assets in new and far different ways, and projects will take on a very different appearance. Managers and teams will be forced to learn vendor management skills and how to oversee relationships with service providers rather than possess deep technical knowledge about machines or code.

They will also have to understand how and when to make changes based on the organization’s rapidly changing needs and requirements. This, in turn, means understanding contracts and tying them to metrics in far more sophisticated ways. Finally, this new business and IT model translates into a need for negotiation skills and governance models to tie all the pieces together seamlessly.

For now, CIOs can take a giant step forward by thinking of IT outsourcing in a broader and more holistic way. Call it smart sourcing.

About the Author

Samuel Greengard is a contributing writer for CIO Insight. To read his previous CIO Insight blog post, “The Future of Customer Support,” click here.