Digital and Technology Sourcing

Is your organisation getting the best value out of its IT vendors and the cloud?

The way organisations deliver capabilities and services continues to be disrupted by new technology.

Business users increasingly demand cloud services. Agile has become the norm for enterprises in the public and private sectors. Many other technologies across the stack provide opportunities to optimise customer experience.

To keep pace, the commercial function needs to adapt to manage an increasing number of technology contracts and vendors whilst achieving and improving value for money. This is the role of Digital and Technology Sourcing; typically as part of a much broader IT Operating Model transformation.

The move to bimodal IT continues, and many organisations are now managing technology estates comprising digital/cloud technologies alongside an ageing legacy estate.

Contracting for agile software development, securing value from the cloud, and sourcing innovation creates challenges that are unique to technology categories.

Often, the legacy estate has grown organically, is large and not interoperable. This creates constraints on commercial and procurement strategies, making it difficult to keep pace with market innovation.

Building on our significant expertise and experience, we have developed a Digital and Technology Sourcing methodology to explain how we help our clients move from complex legacy estates to flexible and dynamic resources. Our methodology covers the key stages of the sourcing lifecycle:

Overall, public sector spend on cloud storage and IT support has continued to rise year-on-year, reaching a total of £2.6 billion.

Crown Commercial Services

Strategy stage

The first challenge is creating a Digital and Technology sourcing strategy that supports the wider transformation of the business. Market trends like cloud and agile development create unique commercial challenges. There is a need to consider the integration of new technology with legacy platforms, many of which are beyond end of life.

Sourcing stage

The next challenge is to engage the market and achieve effective competition for digital goods and services. Our experience shows that organisations struggle with the price fluctuations inherent in pay-per-use models, such as those used by cloud vendors, which makes it difficult to predict and plan for costs.

Contracting for agile outcomes creates commercial uncertainty that challenges VfM. Further, with constantly evolving source to pay tools, technology challenges how the sourcing process itself is executed. Greater consideration for organisational change is required to appropriately respond to these challenges.

95% of respondents say they expect cloud-based sourcing and supplier management tools to replace their traditional tools, systems, and processes.

Source: HBR

Enable & Manage stage

Finally, there is the challenge of managing an increasingly complex technology vendor landscape. Increasing the number of cloud vendors in the estate means that data, automation, and effective organisation are more important than ever.

Our approach

Our D&TS methodology reflects the full breadth of services and it is designed to recognise that technology sourcing is currently a mixed economy of complex sourcing transactions for high value bespoke technology (e.g. in government) as well as increased demand for sourcing strategies on how to source and manage cloud services.

Digital and Technology Sourcing

Buying technology effectively

The way many organisations are procuring technology is changing. Instead of relying on infrequent large scale and complex transactions of bespoke (and often expensive to maintain) technology solutions, we see a need for a more strategic and agile approach to expanding your technology portfolio.

Whether you are looking to refresh your existing technology to cope with increasing customer demand, or to invest in new solutions to support your transformation programme, your organisation will need support in choosing the appropriate commercial vehicle and also understanding how technology is going to fit and serve your existing business.

We can support you in procuring technology solutions or services to deliver your objectives and business outcomes. We choose the right technology solution portfolio from a range of services in the marketplace that will meet the requirements of both the business and the end user.

Our experience spans both sourcing of ‘legacy’ and bespoke technology at enterprise scale, as well as cloud services. We can help you develop cloud strategies to achieve benefits such as reducing whole life technology costs, accelerating innovation and creating new value not possible in the old on-premise world.

Optimising technology costs

Increasingly we find organisations struggle to manage and control technology spend. Even those that understand cost experience challenge as the complexity of IT spend increases with an ever-growing number of technology vendors.

Organisations need to consider IT cost optimisation as an ongoing discipline rather than a one-off exercise. Without this shift, an organisation will not only fail to manage spend, but in the process of doing so, may cause detrimental damage to the delivery of services.

We can support you to take a more strategic and structured approach, enabling you to move away from cost-cutting to cost optimisation.

We can deliver and embed this capability within your teams, so you can continue your journey in the long term, driving cost reduction whilst maximising business value.

Technology contract management and service integration

With a large portfolio of existing technology, including legacy and bespoke systems, many organisations struggle to effectively transition to make the best use of the procured technology solutions/services, such as cloud.

When trying to leverage the benefits of both existing and new technology contracts, organisations need to look beyond the technology and consider if they have the right roles, responsibilities and skills understood by people delivering technology solutions.

We can support you in getting control of your technology services and supplier performance. We can deliver end-to-end service performance management, enabling alignment of performance objectives across the supply chain. By adopting pragmatic governance models you will be able to regain management and continuous improvement across your processes, suppliers and services.

However, around 30% Cloud costs are wasted because of lack of focus on post-contract and financial risk management. Because of the speed of change in the market in terms of players, services and charging models, it is difficult to keep up and ensure that your Cloud arrangements still provide the best value for money for your organisation.

We can help to ensure the most beneficial commercial arrangement for your organisation to access and manage your Cloud services.

We can help you to forecast demand and right-size the Cloud service mix to what you actually use, choosing the right charging model depending on your demand and business requirements. We can also give you the capability to track and optimise your Cloud use by linking your spend metrics to business KPIs.

Contact us

David Bendall

David Bendall

Partner - Technology lead for PwC Home Affairs and Policing, PwC United Kingdom

Tel: +44 (0)7841 947145

Tom Hobohm

Tom Hobohm

Senior Manager, PwC United Kingdom

Tel: +44 (0)7483 407411

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