Why a ‘bimodal organisation’ requires adaptive sourcing

Traditional enterprise sourcing procedures are proving unfit to deliver the level of agility, speed and innovation that a bimodal organisation needs.

Traditional enterprise sourcing procedures are proving unfit to deliver the level of agility, speed and innovation that a bimodal organisation needs.

Gartner believes that a bimodal organisation needs to adopt an adaptive approach to sourcing, where the distinct needs of both modes of IT are recognised.

According to the research analyst firm, a bimodal organisation has two modes of IT. Mode 1 is traditional, emphasising safety and accuracy while Mode 2 is non-sequential, emphasising agility and speed with both “necessary and must work in tandem.”

“A truly bimodal approach to managing IT requires that sourcing reflects the different requirements of the two modes,” says Ruby Jivan, research vice president, Gartner.

“In a controlled and coherent fashion, this sourcing should deliver the industrialised low-cost solutions that support Mode 1, while enabling the more dynamic, exploratory and agile needs of Mode 2.”

The new opportunities and threats of the digital economy are forcing organisations to focus on fast, flexible, collaborative innovation.

As a result, Jivan claims CIOs need to improve their sourcing strategy to provide a sustainable boost to the IT agility of their organisation.

While traditional sourcing can constrain improvements and innovation, adaptive sourcing can deliver greater agility benefits than the more homogenous traditional sourcing approaches.

By applying an adaptive sourcing approach, Jivan believes CIOs can “rationally apply” different governance rules to IT services in each layer, regardless of the buying centre requesting the services (e.g., IT, the chief marketing officer and the chief digital officer).

Adaptive sourcing uses a three-layer model to gain agility:

Innovate:

Services are sourced on an ad hoc basis to address emerging business requirements or opportunities. They typically entail a short life cycle and use departmental, external and consumer-grade technologies.

Differentiate:

Services that enable ongoing improvement of unique company processes and industry-specific capabilities. They have a medium life cycle (one to three years) and need frequent reconfiguring to accommodate changing business practices and customer requirements. At this layer, continuous process improvement and reconfiguration are the major goals.

Run:

Established services that support the end-to-end delivery of IT services, such as core transaction processing and critical master data management for corporate processes and the entire business.

Typically, they constitute 50 percent to 70 percent of the IT budget and, being critical for business viability, they are subject to the highest controls in terms of security, compliance and financial and technical compatibility, for example.

Process efficiency is the primary focus at this layer. Because the Run layer includes the operation and support of systems of record, innovation and differentiation (once the latter two enter production), the compliance requirements are very specific.

There is, however, a need for modernisation of the production environment to prepare for the new digital technologies that will form the basis of the Innovate and Differentiate layers.

“Adaptive sourcing affects operating practices at many levels, so CIOs who anticipate the effects are more likely to succeed,” Jivan adds.

“The success of adaptive sourcing rests on the agility of the sourcing and vendor management organisation to embrace robust management practices.”

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