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Strategic evolution
A global survey on sourcing today


Introduction Executive summary About this survey Success or failure? Measuring the strategic value of sourcing Sourcing the outsourcer People: the forgotten component for success Evolution KPMG’s global sourcing contacts 2

2 Strategic evolution: A global survey on sourcingtoday

Egidio Zarrella
Global Partner in Charge, IT Advisory Today’s globally competitive business environment is forcing organizations to take a harder look at their operations in order to compete effectively. As a result, it is no surprise that senior executives are looking at their business functions with an eye to achieving business objectives faster, reducing costs, andimproving service and process effectiveness and quality.
Companies and governments around the world now recognize sourcing as a global game – strategically placing business operations offshore or onshore, driving the achievement of these key business objectives. While sourcing is utilized by many organizations as a key mechanism for achieving business goals, it often suffers from negative publicity.Outsourcing failures are often heavily publicized and offshoring is still a politically sensitive topic globally. Unlike most global research, this survey examines both the customer and supplier perspective. Through this survey, KPMG’s Advisory practice aims to examine the different elements of a sourcing contract and the effect of each of these on the success of the relationship and resultantbusiness outcomes. The results of our survey disprove the common myth that sourcing is a ‘failure plagued’ phenomenon from both the customer and service provider perspective, with sourcing here to stay. This is not to say that everything is perfect. A number of key themes and opportunities for improvement emerged from our discussions and research, notably: • The monitoring and management of sourcingbenefits is often sub-optimal • The sourcing service provider selection process is often unwieldy and takes too long • The importance of involving the ‘right people’ and aligning the cultures of the organizations involved is as critical as ever. We hope that the insights contained in this survey will open up productive discussions with both customers and service providers around current practicesand helping to ensure sourcing remains a key tool in the achievement of strategic business objectives.

Strategic evolution: A global survey on sourcing today 3

Pradeep Udhas
Global Partner in Charge, Sourcing Advisory Globalization, increased competition, and a challenging economic environment are driving many organizations to re-evaluate their business models in an effort to enhanceperformance. Companies feel the need to focus on their core business activities and are therefore looking to outsource their non-core tasks.
Today, sourcing is as important as selling for organizations, as it not only impacts profitability, but also makes it much more nimble in today’s dynamic environment. When one hears of more than a billion dollars worth of offshore outsourcing deals today, it isobvious that global organizations are keeping the ‘criticism’ about outsourcing in proper perspective. Even conservative organizations, the so called ‘late majority’, are considering sourcing as an integral part of their strategy. This has given a greater impetus to the sourcing industry, which has recently shown a compound annual growth rate of 28 percent. Executives now understand thatoutsourcing is a business-related decision and are therefore regarding it more strategically. This survey is intended to help organizations leverage the experiences of top management executives who are at the epicenter of major outsourcing initiatives, in order to gain valuable insights into how to manage successful outsourcing relationships. This is perhaps one of the largest global sourcing surveys,...