The Sourcing Lifecycle - a paradigm shift for Financial Services

There are so many different models for sourcing - from traditional business process outsourcing to offshoring; application service provision to supply chain management; from joint ventures to alliance partnerships - that many decision makers are unsure of the best way to move forward.

The underlining value within the Financial Services sector must be on delivering a transformed business in the most beneficial way possible. There is a concerted move away from the 'one size fits all' sourcing approach that was displayed in the market during the late 80's and 90's, an approach which left many decision makers with inefficient back/front office processing, ineffective IT management and control and uncompetitive high cost bases.

Decision makers have learnt that the sourcing decision to be made is no longer simply a case of which offshore site to select, but is now 'what sourcing strategy and approach will deliver the most value to my organisation?'. The days of pure cost cutting being the driver for a particular sourcing approach have disappeared and been replaced with a strong focus on transforming their organisation with a number of new drivers including:

    Developing additional revenue streams
    Harnessing the power of existing Partnerships
    Multiple Partner strategies
    Value creation
    Handling operations and technology together

This has resulted in the evolution of a new sourcing model. Business decision makers need to understand what they are getting into as they review and appraise the processes, products and functions of different sourcing structures. There is a stronger need to align the organisation's strategic direction, growth plans and long term aspirations with the nuts and bolts of the sourcing agenda.

Businesses adopting smart sourcing no longer see this as just a cost saving project. They seek business efficiency. That means adopting sourcing strategies that deliver growth without increased investment. It means moving services offshore to release funds for investment onshore. It means shifting structures so that the front office services are delivered at the highest level of effectiveness. It means creating a partnership environment which is managed effectively and controlled for mutual benefit. It means a back office processing function operating at the lowest costs and highest efficiency.

The sourcing approach adopted must be seamless and integrated. Financial Services organisations worldwide are looking to rationalise through business transformation sourcing.

Business transformation sourcing allows all aspects of the sourcing lifecycle to be addressed. The diagram highlights the key sourcing phases which should be developed in order to achieve sourcing success and more importantly sourcing value creation.

Organisations have a growing concern about losing control of their intellectual capital and the business knowledge of key employees whose jobs or roles may be threatened by the sourcing approach taken. As part of an effective sourcing strategy, organisations must carefully examine the goals they wish to reach, but equally their concerns and doubts. This exercise not only will help in developing a sourcing strategy, sourcing maxims and prioritisation of goals, but will educate various constituents in the organisation about realistic outcomes and possible false assumptions.

By commencing the sourcing lifecycle at the beginning, instead of jumping in with an outsourcing decision and short circuiting the thinking, the organisations goals and direction can be mapped against the sourcing approach to ensure that the correct path is taken allowing all sourcing options to be considered, thereby increasing the validity of the approach and ultimately delivering optimal value.

Bluerock Consulting has extensive experience of all stages within the sourcing lifecycle. We have worked with Retail Banks, Investment Banks, IFAs and Insurance organisations in shaping the sourcing environment and strategy through to ongoing partner performance assessment and partnership management. We would be happy to discuss you individual sourcing requirements and answer any sourcing questions you may have.

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