Managing the sourcing process: A life cycle perspective

Outsourcing, whether of IT or business processes, onshore or offshore, continues to raise expectations and pose challenges for private and public sector organizations alike. Time and again, we have found even experienced organizations running into massive problems, suffering from slow organizational learning, and working in a reactive rather than an anticipatory mode.1 The results are troubling. Here are some recent examples: In 2000, UK retailer Sainsbury signed a seven-year US$3.25 billion deal with Accenture to outsource its IT operations. By late 2004, the deal had been renegotiated twice, and Sainsbury had announced a 2004/05 write-off of US$254 million of IT assets, and a further US$218 million write-off of automated depot and supply chain IT. In October of 2005, Sainsbury announced that it was terminating the Accenture relationship and bringing IT back in-house.2A 2004 report into 182 outsourcing deals found more than a fifth ended prematurely.3In 2004, JP Morgan and Chase scrapped its US$5 billion contract with IBM two years into a seven-year deal, concluding that much of the work could be better handled in-house.4Also in 2004, DuPont was reported to have discovered US$150 million in over-charges relating to outsourcing services with its supplier.5