"Fair is foul, and foul is fair: Hover through the fog and filthy air"
Shakespeare, Macbeth.
In this blog I describe the fates which direct sourcing. (A mixed metaphor is used by me as I couldn't get past Shakespeare’s Three Witches and their infamous first act line, which unfortunately is a portent to many sourcing relationships.) The three sourcing fates are TINA, SAM and DAE. Each of them must be fully understood and managed closely for sourcing success.
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The first of the sourcing fates is TINA. TINA is an acronym for ‘There Is No Alternative’. TINA is responsible for ensuring that all firms utilise sourcing in some way, shape or form. In other words, every firm sources products or services to some extent. This is what determines the shape and boundary of your firm. You simply need to look around your workplace to see clear examples of sourced products or services. The handset on your desk, the end-user device you are using (PC, laptop, notebook, tablet), your servers, data centres, and even your applications. TINA also decides the nature of the sourcing agreement. The agreement’s terms and conditions and the accompanying services. TINA is an Aries, characterised by lots of energy and creativity. This is exactly what is needed to bring out the change of a sourcing initiative. Unfortunately, like Shakespeare’s witches, TINA is often beset with chaos. Not all the staff and stakeholders know about or agree with the sourcing model and invariably the performance metrics are not universally aligned with the business needs (Gartner, 2008).
The second of the sourcing fates is SAM. SAM is an acronym for ‘Sourcing Account Management’. SAM is responsible for how you manage your sourcing relationships. SAM determines who in your organisation is accountable for what sourcing processes and reciprocally who in the provider’s organisation is accountable for those sourcing processes. Moreover, SAM is responsible for articulating the governance framework for the relationship. That is, who meets with who and the attendant terms of reference. SAM is a Gemini. She is characterised by duality. A fitting characteristic as it represents the two primary parties of the sourcing relationship; the customer and the provider. SAM displays a communicativeness, dexterity and adaptability. This is a mandatory requirement for a healthy sourcing relationship during its lifecycle. Unfortunately, like Shakespeare’s witches, SAM is often beset with conflict. As observed by Gartner, relationship management roles are often not well defined or architected (Gartner, 2008). Moreover, many sourcing governance models do not adapt, rather they teeter between dysfunction and disorder.
The third of the sourcing fates is DAE. DAE is an acronym for ‘Dollars Are Everything’. What I mean by this is that, first and foremost, every sourcing deal must stack up financially. This means that is must be cheaper than if you performed the same transaction internally. Furthermore, it must be cheaper once you have factored in the cost of managing and governing the provider. My heuristic is that it must be more than 10% or at least your internal rate of return cheaper in the marketplace than if you do it yourself. DAE is the eldest of the three sourcing sisters. She is a Taurus and is driven by money. That is, DAE adheres to the first rule of effective sourcing – Coase’s law. Unfortunately, like Shakespeare’s witches, DAE is often beset with darkness. The savings expected by sourcing buyers are often not realised (Gartner, 2008). There are other dimensions of sourcing value. But be crystal clear, if the dollars don’t add up then the sourcing deal is a stinker. Talking to any competent C-level executive about the other dimensions of sourcing value when the dollars stink will simply result in a look of astonishment.
So between Fates and witches sourcing success represents a difficult road. To avoid, "Double, double toil and trouble" (Shakespeare, Macbeth) those responsible for the sourcing relationship must have a clear picture of TINA, SAM and DAE.
Ernie Zibert can be contacted on ernie.zibert@gmail.com.
You can download this blog as an ebook from Smashwords.
You can download this blog as an ebook from Smashwords.
The image is The Triumph of Death, or The 3 Fates a Flemish Tapestry (probably Brussels, ca. 1510-1520), located in the Victoria and Albert Museum, London, England.
