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Sourcing Innovation

Lev Lesokhin, EVP Strategy and Analytics, CAST
CISQ Governing Board Member


I just had the opportunity to spend a day at the Gartner Sourcing Summit. Always a useful event and interesting to catch up with the latest in the IT sourcing space. I thought I’d share just a couple observations.


Picture of CISQ’s table at Gartner Sourcing & Strategic Vendor Relationships Summit, September 21-23, 2016, Grapevine, Texas, USA



Browsing the booths, as usual it’s mostly the traditional mix of IT services providers. Led by Wipro and Hexaware, the sponsors are all talking up their latest methodological and technical prowess. The leading edge of innovation on the vendor side is around IT automation. Almost entirely on the operations side, automation allows the vendors to more quickly and proactively deal with defects. Everything must align to a trend in our industry, and the trend here is certainly “cognitive.” Every vendor has a snappy name for their cognitive agent, Holmes, Ignio, Watson, etc., all of which bring forth the ability to read the tea leaves (or, should I say logs) and tell their team where the next defect is going to happen.


This is the way of our industry. More automation, more data, more analytics, and major trendy pushes to right our wrongs. The dirty little secret is that software development is messy, human developers are messy, and no matter what configuration you put them in, sitting together or apart, they will create errors and problems. Development is hard. We’re not all brilliant software engineers. Some of us are hacks, just trying to make a living. Maintenance is even harder. You have to fix the code that you, or more likely someone else, wrote a long, long time ago. How do you not introduce mistakes?


So, for now at least, we have automation that reads the blinking lights in ops to try to predict flaws. Increasingly, the leading IT services vendors in the industry are introducing deep software analytics from CAST to actually address some of these issues at the source. Or, should I say “in the source.” That’s exciting. Maybe we’ll address some of the root causes of software inefficiency and chaos in a fundamental way. Then we won’t have to carry that little secret anymore. How innovative is that.


On the client side, the innovation push at this conference was for sourcing & vendor managers to broaden the aperture of vendors they research for the business. Also, to stretch our thinking from being procurement-led vendor-beaters to ecosystem-developing partnership builders. Some examples were given of unique win-win-win partnerships between businesses. Like the partnership between Audi, DHL and Amazon that allows delivery right to the trunk of your parked car. In the brave new digital world, there are many business ideas that could be built based on innovative partnerships. So the VMO is encouraged to pre-screen vendors, or partners, for such opportunities.


To me it seems that we may be pushing the pendulum too far here. The VMO is not the business strategy team. In their quest for delivering innovation to the business, the VMO should not go too far outside its expected swim lane. Otherwise, the company starts to look like that 6yo soccer team, not professionals playing their positions.




Still, I agree with our analyst friends, that the world is changing. Vendors are not always just order takers. In the digital realm, vendors come to the enterprise with important expertise that should be considered on an even footing with the client’s own IP and capabilities. But, perhaps I bring some of my own bias in that discussion.


The real innovation for the VMO would be to get closer to the technical risks that they are managing when sourcing technology services. In the case of application development & maintenance, that means applying standards like the ones developed by CISQ to paid outcomes and looking at SLAs that drive the long term value of the software assets. Once our VMO colleagues can get comfortable with these concepts, not only will they provide innovation, but they will secure their company’s innovation platform for years to come.


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