Senior input is key to success

24 November 2008
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24 November 2008

Top executives who "sponsor" sourcing and procurement activities should be kept involved throughout the process says a new report.

Research carried out by law firm Norton Rose warned if sourcing teams fail to fully engage with colleagues, the business case for deals could be undermined.

"The risk is that IT and buying specialists running a procurement project will view the objectives of sourcing too narrowly or may focus on the financial and technology aspects, with the result that the technology and services procured may not be a good fit for the business or deliver the required results," said the report.

Mike Rebeiro, partner and head of sourcing at Norton Rose, told SM the difficulty cited was often not getting senior executives to act as sponsors for projects, but getting them into the necessary level of detail. He added it reflects a widely held view that sourcing is still not at the "heart of corporate strategy".

Sponsors needed to be given "touch points" throughout the negotiation process to ensure the original motivation for doing the deal is represented in the contract.

The study, which interviewed senior executives with a total spend of around £8 billion a year on IT and outsourcing, found only a third of companies involve their business sponsors in the sourcing process. Only 43 per cent of buyers have a set procedure for making sure contracts are aligned with the business case. Around 44 per cent do it on an "ad hoc" basis and 13 per cent have no procedure at all.

The study also found while firms profess to have a "strategic partnership" with suppliers, some buyers thought this meant longer term. Norton Rose said it is when both parties "have a positive influence on the direction of each other's business".

And even when companies identified "strategic" deals there was no change in the buying process to reflect this.

SMnov2008

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