Why It’s Important to Rebalance Your Strategic Sourcing By: Stephen Catalina, CEO, Expense Management Solutions
Rebalance, as defined on merriam-webster.com, means “to restore balance to, or adjust the balance of (something); to balance (something) again.” For many, the aftermath of the 2008 financial crisis required a reassessment and perhaps, a rebalance of their investment strategy and approach. Although investors rode the profitable growth wave for an extended period prior to the collapse, many of them learned that a stagnant model, due to the lack of periodic rebalancing, ultimately set them back. At a very young age, my cousin Joey (not Vinny… I digress, but do highly recommend the fan cult classic movie) introduced me to what he referred to as the “5 P” rule, which stands for proper preparation prevents poor performance. Although this did not resonate with me much in my younger years, as time passed, I began to understand how this rule could apply to life, more broadly. As a strategic sourcing and expense management professional, I have come to learn how this rule applies to (a) achieving internal efficiencies, and (b) optimizing external third party relationships. Ultimately, both parties’ (companies and vendors) desire to build strategic partnerships that align with their goals and objectives. Although the focus of this article is the financial services space, in most industries, companies are using third party providers to support both core and
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non-core services. Examples include technology (i.e. hosted, cloud-based, SaaS), process automation (i.e. robotics, online auctions), artificial intelligence (AI), data analytics (DA), business process outsourcing (BPO) and the like. Ideally, key business stakeholders collaborate with their sourcing partners to execute some form of a competitive bid process to determine the best option for their requirements. In some instances, however, those who are allergic to change (I say this tongue in cheek), simply maintain an auto-renewal state with their current provider(s) for a variety of reasons, all of which are likely valid. In either scenario, an underlying question we often hear is “How do we know if we have a good deal?” Although the criteria for how each company defines a “good deal” may vary, a consistent theme across the board is how do you find the optimal balance of cost, flexibility, risk and performance?
