Strategic Services Sourcing I

Originally posted on on the e-Sourcing Forum [WayBackMachine] on February 26th, 2009

This two part post originally appeared last summer, but I thought would be good to review, as we just saw a Fortune 50 client auction, with 74% reduction in strategic IT services, last week – David Bush.

You’ve probably been following my posts on “Strategic Service Management” and “The complexities of Strategic Services Management” , as well as my pieces on “Strategic Service Parts Management” and “Strategic Workforce Management” and, by now, you’re probably wondering, how do I source that? Well, that’s a good question, but I think the first question you need to ask is, when do I source that?

To answer the when question, you start by looking at the products you are sourcing and asking the following questions:

  • How strategic or mission critical are they?
  • Are they for us or an end-customer?
  • Are they simple or complex?
  • What expertise do we have with respect to their maintenance and repair?
  • What is our capacity?
  • How cost-effective is it for us to service these products?

If you were to answer:

  • Not strategic or mission critical.
  • Internal use only.
  • They’re standard products available from half a dozen vendors.
  • It’s more cost efficient just to replace them when they wear out.
  • We have enough support staff to handle replacement when necessary.
  • We need the office manager for other tasks anyway, so there’s no real cost.

… as you might if we were talking about off-the-shelf laptops, then you would not need strategic services. But if you were to answer:

  • If it fails, a customer’s production line goes down.
  • They are for our end customer.
  • It is very complex electronics.
  • We have two technicians who understand the products, and that’s it.
  • Low (capacity). Our technicians spend most of their time doing initial installations and quality assurance testing.
  • Not very (cost effective). Our technicians are at the home office and most of our customers are in different cities.

… as you would if it was a custom-made control board for your custom-made machinery that ran part of a customer’s production line, then you would definitely need strategic services. But if you were to answer:

  • They are strategic assets, and they would temporarily prevent the delivery of certain services if they go down, but they are not mission critical.
  • They are for our internal use.
  • They are moderately complex.
  • At least half-a-dozen of our technicians can repair them.
  • Our technicians have system maintenance as their primary jobs and with typical failure rates, we have the capacity to service these products ourselves.
  • Our costs for service are industry average.

…, as you would if we were talking about servers, SANs, and rack components in your data center, you probably wouldn’t need the vendor’s technicians, but you would need quick replacement of parts when they failed, as some of your internal, and external, services, as well as service levels, would be affected. In this case, you would need some strategic services, but not all of the strategic services the vendor was offering you.

Only once you figure out what you need with respect to strategic services management, you know the answer to when do I source this, which is when I figure out what I need, and only what I need, and only then can you begin to address the how do I source this question, which is the subject of part II.