The Multisourcing Operating Model

Multisourcing is a new discipline to help organisations get control of their sourcing decisions and ensure that their service relationships — whether insourced or outsourced — deliver long-term value and support business strategies.

Outsourcing became a mainstream business practice by the late 1990s and over the past few years, the number of services that can be outsourced has grown exponentially. However, research suggests that a large proportion of outsourcing contracts fail to meet expectations.

Experts believe that outsourcing has failed because many organisations utilise ad-hoc approaches that are both shortsighted and ineffective. Decisions were made in a tactical, ad hoc and compulsive way — usually in pursuit of short-term solutions, lower labour rates or other cost savings. Few organizations used a true sourcing strategy to guide them, and these tactical outsourcing decisions rarely had anything to do with business strategies. It is no wonder that the term "outsourcing" took on a negative connotation.

Multisourcing is an operating model that was introduced by Gartner Inc in 2005. It is based on extensive, multiyear research and was developed in response to widespread dissatisfaction and the outright failure of outsourcing deals.

Gartner define multisourcing as "the disciplined provisioning and blending of business and IT services from the optimal set of internal and external providers in the pursuit of business goals." Multisourcing is not simply selective outsourcing or selecting multiple service providers to perform various tasks. Rather, it is a new way of making sourcing decisions that align with business goals that have been examined rigorously and are governed effectively. Organisations who adopt a Multisourcing operating model will follow a structured approach based on the following fundamental processes:
  • Assessing current situations, 
  • Developing sourcing strategy,
  • Governing services
  • Selecting and evaluating service providers,
  • Measuring progress.
If this argument seems to just give a new term to an old problem, then consider these Gartner predictions:
  • "Through 2010, organizations that continue to apply outsourcing as an ad hoc solution to tactical business problems will be dissatisfied with the performance of their contracts more than 70% of the time."
  • "By 2010, market leaders will instill disciplined multisourcing as a core competency for successful business operations. Lack of multisourcing management discipline will result in large-scale business disruption among buyers, suppliers and their value chains."