Recent rapid technological changes have transformed the role of global IT outsourcing in companies' strategies. Traditionally viewed as a cost-saving measure, IT outsourcing is also increasingly being leveraged as a strategic tool for acquiring cutting edge invention. This quest of capacities and emerging technologies, however, has elevated the complexity of managing supplier portfolios. In this specific article, the authors introduce the "long-tail" strategy, an innovative IT outsourcing model that combines a few key partnerships with a dynamically changing number of smaller contracts with other providers that may deliver specific value propositions beyond the abilities of the key partners.
The authors' extensive indepth interviews with important companies in energy, company services, technology, manufacturing and financial services imply that the long-tail strategy can help subvert organizations to achieve their company goals. For instance, the long-tail strategy helped a leading international bank establish and maintain technological leadership in the financial services sector, and enabled Toyota Motor North America to realize high-speed initiation. In order to implement the long tail strategy successfully, companies should institute five key practices: (1) distributing duty within the company for scan for new technologies; (2) nurturing relationships with new "long tail" providers; (3) supporting sales pitches from suppliers; (4) governing the entire outsourcing portfolio; and (5) design for integration. When executing these practices, organizations should seek to produce a more proactive, entrepreneurial and culture that is dynamic in IT outsourcing. If executed well, the long-tail strategy can transform IT outsourcing in an age of digitization and globalization into a driver of innovation and value development.
The Long-Tail Strategy of IT Outsourcing case study solution
PUBLICATION DATE: January 01, 2016 PRODUCT #: SMR541-PDF-ENG
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