Insights into strategic vendor consolidation, part 3: A recommended approach

In this three-part blog series, we’ve talked about the drivers and benefits of strategic vendor consolidation, as well as factors to consider before making the investment. In this final blog, I want to share a recommended approach for consolidating vendors that helps to ensure a seamless transition and a strong ROI.

While a growing number of organizations understand the value of vendor consolidation and are pursuing it, the failure rate can be high. In fact, as my colleague Amar Aswatha pointed out in blog two of this series, up to 30% of vendor consolidation initiatives fail.

What is the best approach for overcoming the challenges of vendor consolidation and achieving its full value? I’ll share a three-stage approach that helps organizations consolidate in a way that’s well-governed, timely and cost-effective, achieving their desired business outcomes and positioning their organizations for future success.

Stage 1: Develop a holistic consolidation roadmap

This first stage involves a thorough assessment of the organization overall, as well as each line of business, to develop a holistic consolidation roadmap. Key to this assessment is carefully defining where the organization wants to be in the next three years and the path that’s required to reach that destination.

Figuring out the organization’s best path forward requires taking a close look at its strategic objectives, digital capabilities and needs, talent resources, etc. Line-of-business discovery sessions, resource risk profiling and prioritization, change impact analysis, and business continuity planning are just some of the activities conducted to complete this assessment.

The output of the assessment includes a range of detailed plans covering all aspects of the transition, including governance, communication, people management, change management, and more. With these plans, every requirement and step are laid out, providing a clear and actionable transition roadmap.

Stage 2: Onboard contingent talent and migrate to global delivery

In this stage, pre-cutover activities are completed, including contract signing, communications, and contingent labor contracts. A governance model also is set up to oversee the final cutover and transition. Once the final cutover takes place, responsibilities and resources are migrated to global delivery teams in phases.

Each of the plans formulated during the assessment phase come into play during this stage, guiding the transition’s progression. Key post-cutover activities include iterative migration planning and execution, performance management and KPI reporting, project management office value management and governance, change management, and communications.

In this phase, it’s important that the global delivery model is organized into client-dedicated teams. These different teams, in turn, should form a unified, client-focused delivery stream, whether the delivery model is onsite, nearshore or offshore.

Stage 3: Reach steady state operations and optimize the partnership

Once responsibilities and resources have been migrated to the global delivery teams, the focus turns to maintaining ongoing steady state operations and optimizing the partnership model. For these activities, CGI uses a Client Success Framework that includes four pillars: Executive Governance, Noiseless Administration, Relentless Optimization, and Accelerated Transformation.

Executive Governance encompasses a joint governance model that enables oversight of all delivery processes to ensure effective delivery. In terms of governance, it’s important to ensure strong collaboration among the selected vendors, which will help optimize their capabilities and strengths. CGI often serves as the orchestrator of this type of ecosystem, working closely with the client and other preferred vendors to drive the required transformation and outcomes.

Noiseless Administration involves setting up a project management office and overseeing onboarding, talent management, invoicing, reporting, and other general administrative activities. Relentless Optimization focuses on reducing operational redundancies through centralized skills forecasting and development, standardized intake management, estimation process, tools deployment, and delivery practices.

Lastly, Accelerated Transformation guides the transition of services delivery from an input-based (T&M) model to one focused on business outcomes. This includes creating a culture of innovation through innovation best practices and subject matter experts.

Expected business outcomes

What can an organization expect from this proven approach to strategic vendor consolidation? Here are just a few key benefits:

• Immediate and ongoing financial benefits: From strategic investment to fast-track cost savings
• Seamless transition: Via a risk-managed, right-shoring transition framework
• Location-risk diversification: Based on a scalable client-aligned location strategy
• Full capabilities, including proven methodologies: Aligned with a deep understanding of the client’s business

Making the investment

As one of the world’s leading managed services partners, CGI is working with clients to explore and implement vendor consolidation strategies and approaches. If you’d like to learn more about the approach I’ve outlined above, our work in this area, and the outcomes that we’re helping clients to achieve, feel free to contact me.