IT and its role in Sourcing and Outsourcing

It's amazing what can happen when you bring together top IT executives from various industries to exchange ideas and share experiences. During the most recent Sourcing Interests Group (SIG) Summit in beautiful Amelia Island, FL, we had the opportunity to facilitate a roundtable discussion on the role of the CIO office in the evolution of enterprise sourcing.

SIG congregates a select group of sourcing and outsourcing leaders for several of the most important organizations worldwide. Collectively they manage hundreds of billions of dollars in spending. They maintain a tight community and close face-to-face and on-line collaboration throughout the year, while also getting together twice a year during the summit to learn from each other, and figure out best practices and industry standards.

During the summit's first day of activities, four concurrent roundtables were assembled to get a 360 degree view from the BPO, CPO(2) and CIO roles, on four key topics: Innovation, Social Media, Macro Changes in the Global Economy (a conversation guided by Steve Forbes), and Globalization.

To provide additional context to our table on how the IT side of the house can help to evolve enterprise sourcing, three additional premises were laid out:

1. IT is under scrutiny.
   Almost every IT industry insider can acknowledge that the CIO is in the middle of a whirlwind. Analysts and pundits have outlined several theses, theories and concepts to describe the forces putting pressure on the CIO--from Forrester's Business Technology concept, to Gartner's Industrialized IT Services or Constellation Research Ray Wang's Four Faces of CIOs.
   Our own interpretation (heavily influenced by some of them), concludes that there are 3 main forces putting pressure on the CIO:
   1. Overall drop in credibility in the IT industry due to dismal performance of corporate IT;
   2. Legacy systems and ingrained practices hinders business agility;
   3. Consumerization of IT drives today's business user expectations of enterprise IT.
2. IT is a big enabler for streamlined sourcing.
   IT helps the sourcing function to drive business value in three major areas:
   1. Aggregating data and enabling tools to access and analyze it;
   2. Integrating and automating cross functional processes;
   3. Implementing ePurchasing solutions that support sourcing and vendor management professionals in buying goods and services. These include software categories like eProcurement and eSourcing as well as others like contract life-cycle management (CLM), automated spend analysis, and supplier performance management.
3. IT is a big spender.
   According to Gartner's "IT Metrics: IT Spending and Staffing Report, 2011", overall IT spending per employee averaged $12,350 during 2010, across public and private enterprises worldwide. That number is expected to increase in 2011, according to the study.
   Organizations spend in average 3.5% of their revenue in IT, with the Banking & Financial Services sector leading the charge, spending 6% of their revenue in IT.
   With the advent of mature global service delivery models and cloud computing, many IT organizations are starting to shift from a "buying and capitalizing" mindset to a "sourcing and renting" IT services mindset in order to enable more flexibility in the future.

These topics set  the table up for an invigorating discussion to answer the question: How is the CIO enabling and/or driving the evolution of enterprise sourcing?

So please, stay tuned for the upcoming pieces:

Part 2, Innovation: We are not as smart as the combined market is.

Part 3, Social Media: The bridge to capture next-gen talent

Part 4, Globalization: A shrinking world with cultural differences