MSD Partners

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Demand Management Organization : the way to good practices in sourcing

Despite the growing use of good practices to control the internal organization, the sourcing field is still too often managed according to the willingness of the individual. The lack of a structured repository creates a area of tension between management professionalism and any quality expectations. Never-the-less, best practices are available, albeit with a potentially low degree of pragmatism and practice. The concept of the Demand Management Organization (DMO) incorporates these best practices in an understandable approach.

Managing the full picture

Sourcing management is visible across several interrelated areas. Firstly there is the problem of defining the selection criteria: any received offers have both advantages and disadvantages. It is therefore key to be able to effectively translate the business and IT strategy into tangible and useful sourcing criteria.  Secondly, it is necessary to divide offers into the sourcing life-cycle.  Then, it is essential to be able to correctly estimate any variable parameters that are likely to change during the contract, providing the necessary mechanisms and practices. Finally, the fundamental requirement of a sourcing repository is that it installs the means to drive the services acquired by the client, in terms of quantitative and qualitative planning at the operational level, governance and audit, and then the eventual termination of contracts.

DMO: Integration and Growth

The minor success of existing good practices (ISPL, Sourcing CMM, eSCM…) lies without any doubt in their complexity. All have their speciality, whilst partly neglecting other areas; they fall into a too acute complexity to be practical. In this context, MSD Partners, an independent consulting firm, has developed the DMO model, incorporating the existing bases. The results are fully integrated with other related processes and also support potential growth.  DMO provides in its basic version an easy to implement management framework, while, if required, leaving enough space and flexibility to further develop specific fields.

DMO is based on four levels of management. The first level includes the management of the sourcing strategy, basis for the selection criteria, evaluation and service management. The second level is designed to manage the quantitative and qualitative planning, aligning the needs of business and the service delivery. The third level manages the daily delivery, with a set of measures to detect and solve problems of alignment and quality. Finally, the fourth level handles service transition.

One of the key tools of DMO is the service delivery mapping: a relatively simple matrix showing internal and external responsibilities, activities and deliverables to be formalized. Linked to this 'result oriented’ mapping, the second key tool is process mapping. Indeed, regardless of whether the service is performed internally or by one or more suppliers, client management will have to manage relationships and interdependencies between the different units responsible for the service chain.

DMO provides the basic framework to enable business leaders to control the environment, where control is recognized as being the basic condition to drive results and thus finally make a commitment towards those results as desired by the business.