The Bifurcation of Sourcing Strategies

Our closing keynote at TSW last week was Jeff Howe, author of the book Crowdsourcing. Fantastic presentation and a great Q&A followed. However, despite advances in technology, the concept of self-service, and the emergence of “crowd sourcing” problem solving, the delivery of technology professional services remains a very human capital intensive endeavor for product companies. Complex services solving complex customer problems require complex skills sets from delivery resources. The never ending challenge for product companies is that it is always easier to burn another CD or build another mother board than it is to hire, train, and deploy a competent services employee. However, product companies are becoming much more aggressive and creative in the tactics they are pursuing to increase their ability to scale services capabilities. To secure product adoption success or maintain account revenues, product companies needs service offerings to be available in a global and consistent manner. To guarantee services are available on a consistent, global, scale, product companies are turning to five key resource pools.

Traditional Resource Pools

There are three traditional resource pools product companies draw from to source their professional services engagements:

  • Direct Local Resources: These are PS consultants employed directly by the product company and residing locally, close to customer engagement sites.
  • Local Delivery Partners: Services delivery partners that are identified and engaged by an individual country or specific region.
  • Corporate Practice Resources: These are PS consultants that have hard to find, specialized skills . They are leveraged across multiple geographies.

Of these three pools, local FTE’s have been the most heavily leveraged delivery resource followed by local partners.

Emerging Resource Pools

More recently, with the flattening of the globalization of the technology services industry, product companies have explored two additional resourcing options:

  • Centralized Solution Center Resources: These are delivery resources that can be leveraged to deliver portions of a PS engagement without being on the customer site. These resources are typically clustered where labor costs are lower.
  • Global Delivery Partners: Services delivery partners that are identified, selected, and enabled at a global level.

The services management team must decide what combination of these direct and indirect resources will be employed to scale delivery capabilities. The image below provides a graphical view of the five resourcing options.

Sourcing Options

Sourcing Options

What we are seeing in our benchmark and project performance data, is a bifurcation of sourcing strategies. Historically, product companies employ a sourcing strategy that is heavily waited to local FTEs and local partners as shown below. This is still the majority model.

Traditional Sourcing Strategy

Traditional Sourcing Strategy

However, an emerging class of product companies are deploying a much more leveraged model for sourcing services engagements. One where centralized solution centers, local partners, and global partners play a key role as shown below.

Emerging Sourcing Mix

Emerging Sourcing Mix

What sourcing profile makes sense for your services business? We believe aligning sourcing strategy with services strategy is a changing discipline within product companies. It is a discipline that can have substantial impact on multiple key metrics, including project margins and time to source. Currently, we are collecting more detailed information on both sourcing and partner practices from our TPSA members. If you would like to participate in this study to gain insight on what sourcing strategies are most prevalent in the industry today, visit:

http://www.tpsaonline.com/member_surveys.asp#pmpolpracsurvey

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