Rethinking IT Sourcing and Supplier Management for the Digital Age

In the new era of digital transformation, the role of IT sourcing is becoming more strategic. A recent global outsourcing survey showed 53% of respondents outsource elements of their IT function and that continued growth in outsourcing is expected for the foreseeable future. Due to dependency on external partners, there is an increase in both the potential opportunities and the risks involved. Organizations can benefit from integrating third party capabilities, and accommodating ‘outside in’ innovation that leverages the considerable knowledge base of supply partners and creates synergies among other business ecosystem participants. Despite these opportunities, sourcing organizations have many challenges to contend with, such as sustainable supply chain governance, end-to-end traceability, legal and regulatory global compliance, data privacy, and tolerance for risk in service level agreements and contracts. New outsourcing models such as cloudsourcing, microsourcing, crowdsourcing, impact sourcing and rural sourcing have evolved, and many of these new models require behavioural and managerial type shifts. In order to address these challenges, organizations and their suppliers need strong complementary capabilities to build successful relationships. Both contractual and relational governance are important, and organizations additionally need to maintain a strategy of agility and adaptability in order to mitigate the lock-in and dependency risks associated with outsourcing. This paper presents a review of pertinent literature, and discusses core learnings in relation to impacts on sourcing and supplier management in a digital business landscape. Based on an analysis of the literature and insights gained from engaging with industry and academic experts, the paper proposes a model that can be used to develop a capability to support effective sourcing and supplier management. This model provides a basis for further development in an industry/academia collaborative research project and aims to provide practical guidance to organizations in facing key challenges and optimizing the opportunities of IT sourcing and supplier management in the era of digital transformation

Rethinking IT Sourcing and Supplier Management for the Digital Age

In the new era of digital transformation, the role of IT sourcing is becoming more strategic. A recent global outsourcing survey showed 53% of respondents outsource elements of their IT function and that continued growth in outsourcing is expected for the foreseeable future. Due to dependency on external partners, there is an increase in both the potential opportunities and the risks involved. Organizations can benefit from integrating third party capabilities, and accommodating ‘outside in’ innovation that leverages the considerable knowledge base of supply partners and creates synergies among other business ecosystem participants. Despite these opportunities, sourcing organizations have many challenges to contend with, such as sustainable supply chain governance, end-to-end traceability, legal and regulatory global compliance, data privacy, and tolerance for risk in service level agreements and contracts. New outsourcing models such as cloudsourcing, microsourcing, crowdsourcing, impact sourcing and rural sourcing have evolved, and many of these new models require behavioural and managerial type shifts. In order to address these challenges, organizations and their suppliers need strong complementary capabilities to build successful relationships. Both contractual and relational governance are important, and organizations additionally need to maintain a strategy of agility and adaptability in order to mitigate the lock-in and dependency risks associated with outsourcing. This paper presents a review of pertinent literature, and discusses core learnings in relation to impacts on sourcing and supplier management in a digital business landscape. Based on an analysis of the literature and insights gained from engaging with industry and academic experts, the paper proposes a model that can be used to develop a capability to support effective sourcing and supplier management. This model provides a basis for further development in an industry/academia collaborative research project and aims to provide practical guidance to organizations in facing key challenges and optimizing the opportunities of IT sourcing and supplier management in the era of digital transformation

Sourcing and Supplier Management - A digital perspective

Digital transformation is increasingly critical to an organization’s competitiveness [1]. It affects many IT management activities and requires organizations to adapt their business models, rethink their strategy, and collaborate with the business ecosystem to provide more innovative products and services. The way that the organization manages and engages with its suppliers is becoming an increasingly important strategic driver in digital transformation initiatives

The Strategic Supply Chain Management in the Digital Era, Tactical vs Strategic

The perspective of procurement and supply chain management is changing dramatically; traditionally, it was seen as a support function; however, the procurement function is receiving increased attention and investment as an essential contributor to the strategic success and a business enabler. While an end-to-end digital supply chain is an opportunity as it unleashes the next level of strategic growth and involves minimal investment in infrastructure, it is still a challenge to optimize and transform. Furthermore, the recent pandemics and geopolitical disruptions of Covid-19, the Ukraine-Russian war, Brexit and the US-China trade war; have structurally changed the global economy and revealed a new risk assessment that will result in the re-introduction of buffers, boundaries across industries and a partial return to regionalization with sort of de-globalization in which existing just-in-time getting replaced by just-in-case strategy

Conflict Resolution in a Multi-level IT-enabled Outsourcing Network: A Structured Solution Approach

Using the case study of an Indian Technology and Outsourcing Service Provider, SmartKey (real but renamed company), a technology vendor to a global healthcare provider, this paper analyses offshore outsourcing issues using IT-enabled services to gain deeper insights needed to understand the core conflict and propose a well-reasoned solution approach. Reasoning, the conscious thought process leading to a well-justified decision, is an important managerial skill required for making dynamic decisions, resolving conflicts, and thereby developing human resources. This paper explores Goldratt’s Evaporating Clouds (ECs) as a systematic approach to reasoning in particular, and as a system for developing human resource in general. We show how Evaporating Clouds provided direction towards an acceptable solution to this case. We suggest that ECs can be used proactively as a springboard to ensure win/win solutions in various possible future interactions between the supply chain network partners. We conclude our paper by acknowledging the limitations of current research and provide future research directions

Risk Mitigation in Supply Chain Digitization: System Modularity and Information Technology Governance

Firms face significant risk when they adopt digital supply chain systems to transact and coordinate with their partners. Drawn upon modular systems theory, this study proposes that system modularity mitigates the risk of adopting digital supply chain systems and therefore motivates firms to digitize more of their supply chain operations. The study theorizes how the risk-mitigating effect of system modularity can be enhanced by the allocation of decision rights to the IT (information technology) unit. The main logic is that IT managers with more domain IT knowledge can better utilize their knowledge in decision making to achieve effective system modularity. We tested these theoretical propositions using a survey study of Chinese companies and found empirical support. We also found that the allocation of decision rights to the IT unit does not directly mitigate the perceived risk of digital supply chain systems, which highlights the role of decision allocation to the IT unit as a key moderator in risk mitigation. The study generates theoretical and practical implications on how IT governance and system modularity may jointly mitigate risk and foster supply chain digitization

TOWARDS AN UNDERSTANDING OF DIGITAL TRANSFORMATION RISK: A SYSTEMATIC LITERATURE REVIEW

Digital transformation research and industry adoption has been on the rise over the past decade with the majority of organisations viewing it as critical to their survival over the next five years. However, in spite of the benefits of digital transformation, it presents a clear but paradoxical risk to organisations such as the requirement to develop innovative products and services while maintaining a stable customer and employee experience. With an estimated 90% of digital transformation projects resulting in failures, several calls have emerged from within the European Conference on Information Systems (ECIS) and the wider academy for research exploring digital transformation risks and the methodologies to manage them (Munns et al., 2022; Rowland et al., 2022). This article presents a systematic literature review (SLR) of 117 papers from high quality information systems (IS) research outlets. This research identifies six major risks that must be identified, monitored and evaluated to enable digital transformation success. These risks encompass the culture, organisation, processes, and technologies being transformed, along with the stakeholders involved in the initiative, and the overall digital transformation strategy being developed

Next generation supply chains: making the right decisions about digitalisation

This white paper is based on research carried out by the IfM’s Centre for International Manufacturing and insights emerging from our work with industrial partners. In it we share our latest findings to help global companies consider their digital supply chain strategies