Why One Outsourcing Provider Is Not Enough - InformationWeek

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Why One Outsourcing Provider Is Not Enough
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ChrisMurphy
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ChrisMurphy,
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11/26/2013 | 9:14:40 AM
Re: Multiple throats to choke come with a price
That's a great point. At GM, when it went to multi-vendor strategy, it tried to enforce certain processes among those vendors for doing 40-some IT tasks -- so it was done the GM way, not the HP, IBM, Wipro, etc. way. That's a complicated endeavor, and one that's probably impossible unless you're an outsourcing customer like GM with something like $3 billion a year in outsourcing spending to entice the vendors.
Charlie Babcock
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Charlie Babcock,
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11/25/2013 | 10:04:52 PM
Multiple throats to choke come with a price
Nearly every IT staff wants to avoid too much dependence on a single vendor. And nearly every staff knows that multiple suppliers come with a learning curve, data integration and complexity price tag attached, however strong the logic. Do those "towers" look anything like silos?
ChrisMurphy
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ChrisMurphy,
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11/25/2013 | 5:44:55 PM
Re: With Personnel Maybe..
General Motors was the biggest example of a company going with a single outsourcer, relying on EDS for 10 years almost exclusively as part of the deal to divest EDS. But its CIO, Ralph Szygenda, sprinted to a multi-vendor approach as soon as he was able, in large part to gain better negotiating leverage. A number of companies who tried "one throat to choke" outsourcing deals in the mid 2000s unwound them. But some companies, like P&G with HP, seem to remain comfortable putting a majority of their IT operations with one big vendor.
Tom Murphy
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Tom Murphy,
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11/25/2013 | 4:54:59 PM
Re: With Personnel Maybe..
Jeff, Shane: Funny, I had the opposite impression. I thought the benefits of risk mitigation were so obvious that spreading your sourcing around was a no-brainer. Imagine any of these scenarios:

a. A manufacturer it completely dependent on one source for, say, memory in a new smartphone. And the supplier is hit by a devastating monsoon that shuts down production for six weeks. Too late to scramble for alternate suppliers, but if you have one or more in place, you can see if each can ramp up production to offset the shortage.

b. All your phones are manufactured in one fatory in China -- and it is destroyed by a fire. If you haven't got another supplier set up, tough luck.

c. You have all your defense companies records secured in your ultra secure datacenter. One day, you arrive to find foreign-government hackers have destroed valuable records. Got a copy stored in the cloud?

Don't all three of those cases make the cost worthwhile?
Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Author
11/25/2013 | 4:21:08 PM
Re: With Personnel Maybe..
That's a good question Jeff. Is the complexity of managing multiple providers worth the potential cost savings and risk-reduction of spreading out your outsourcing plans?


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