sourcing innovation conundrum - sigsig.org/docs2/s46_sourcing_innovation_conundrum... · build...

Build Proposals That Deliver Innovation

to You

Sourcing Innovation

Conundrum:

Boeing

Paul BeckerITI Sourcing

Lawrence KaneSenior Leader, ITI Strategy & Sourcing

www.sig.org/eval

Copyright © 2015 Boeing. All rights reserved.

The Sourcing Innovation

ConundrumHow to build proposals that encourage suppliers to deliver

innovation to your company

2015 Global Executive Summit

26 October 2015

Paul Becker, ITI Sourcing, Boeing

Lawrence Kane, Senior Leader, ITI Strategy & Sourcing, Boeing


Engineering, Operations & Technology

About Boeing…

The world’s leading aerospace company

Provides products and support services to

customers in 150 countries

Designs and manufactures commercial and

military aircraft, rotorcraft, electronic and

defense systems, missiles, satellites,

launch vehicles, and advanced information

and communication systems

Headquartered in Chicago, Boeing employs

more than 170,000 people across the

United States and in 70 countries

More than 140,000 of our people hold college

degrees, including nearly 35,000 advanced

degrees, in virtually every business and technical

field| 3



Agenda

Define innovation

How to achieve innovation with suppliers

How to identify the right work to outsource for innovation

How to identify the right suppliers for the desired outcome

Determine the best way to acquire a supplier to fulfill your business need

– RFI

– RFQ

– RFP

– RFS

How to know if you’re organization has the maturity to succeed

How to perform an RFS

| 4



Discuss… What does innovation mean?

| 5

What innovation do you expect from your suppliers?

Technology?

Business Processes?

Operations?

Services?

Tools?

Other?



How to achieve innovation with suppliers

The level of innovation a supplier brings is prescribed by:

– How much latitude the supplier is given in how they complete the Statement of Work

– Their pricing and profitability model

– The quality of the relationship

– The length of the agreement

– Intellectual property ownership considerations

Make sure you give your supplier their core (your context) work

Give them the ownership and accountability to deliver

Align their interests with yours

| 6



KEY:

ITIL Function

Supplier Contract D

em

and

Mgm

t(Fo

rcas

t)

Serv

ice

Po

rtfo

lio

Mgm

t

Bu

sin

ess

Re

lati

on

ship

Man

age

me

nt*

Fin

anci

al M

anag

em

en

t

De

sign

Co

ord

inat

ion

Info

rmat

ion

Se

curi

ty

Mgm

t*

Serv

ice

Le

vel M

gmt

Sup

pli

er

Mgm

t*

Serv

ice

Cat

alo

g M

gmt

Ava

ilab

ilit

y M

gmt

Cap

acit

y M

gmt

IT S

erv

ice

Co

nti

nu

ity

Mgm

t

Tran

siti

on

Pla

nn

ing

and

Su

pp

ort

*

Ch

ange

Man

age

me

nt(

SNA

P)

Serv

ice

Val

idat

ion

&

Test

ing

Re

leas

e a

nd

De

plo

yem

en

t M

gmt*

Kn

ow

led

ge M

gmt*

Serv

ice

Ass

set

&

Co

nfi

g M

gmt(

CII

M)

Ch

ange

Eva

luat

ion

*

Re

qu

est

Mgm

t

Inci

de

nt

Mgm

t

Pro

ble

m M

gmt

Eve

nt

Mgm

t

Acc

ess

Mgm

t*

Contract 1

Contract 2

Contract 3

Contract 4

Supplier 3 Conract 5

Supplier FunctionRetained (Not in scope of current

contract)

Service OperationsService TransitionService DesignService Strategy

Supplier 2

Provider and Supplier Performing

functionProvider Function

How to identify the right work to outsource

| 7

“Heatmap” tool showcases internal and external suppliers and maps their SOW across the ITSM process framework

Allows you to optimize outsourced work in order to achieve innovation

Example where Supplier may

have enough control to innovate



8

How do you identify the right suppliers for your bid list (or negotiation)?

Tier IIITier IV

Tier II Tier I

High Challenger / Limited Partner Strategic Innovator Partner

Low

Commodity Leader Operational Excellence Leader

Low High

Bu

sin

ess

Tra

nsf

orm

atio

n &

Inn

ova

tio

n

Competitiveness & Productivity

• Supplier and Customer invested in partnerships and innovation

Supplier Engagement• Oversight to drive productivity improvement • Possibility of open technical exchanges / future work

following improved performance

• Strategic partnership improves Customer’s competitive advantage in the marketplace

Supplier Engagement• Oversight to drive Strategy focus• Offer supplier open/transparent technical

exchanges with increased business visibility

• Supplier savings and quality improvements primarily tied to competitive bids or contract renewals

Supplier Engagement• Oversight to drive SLA focus• Supplier should not be actively engaged in Boeing

strategic planning or provided single-sourced work

• Supplier provides year-over-year productivity gains and continuous quality (benchmarks in top quartile)

Supplier Engagement• Oversight to drive Business Value focus• Identify potential innovation or business

transformation opportunities where appropriate



How have your stratified your supply base?

How has identifying strategic partners helped drive innovation for you?

Are you giving the right suppliers enough free reign to innovate?

Have your RFPs delivered on your innovation needs?

9

Discuss…



Optimal way to fulfill the business needL

evel

of

Inn

ovati

on

Need

ed

Readiness to Buy



RFI (I want to know what’s out there)

Assumptions

– Test the market place to see if it’s mature enough to support your business objectives

– Learn about the market options that meet your needs

– Identify common solution

– Market rough order of pricing

– Obtain enough information to issue an RFP

Risks

– Might not find a solution because it’s not tailored to you

– You won’t identify innovation

– It takes extra time

– You may not have enough information to build your business case

| 11



RFQ (I just need a price)

Assumptions

– A commodity will fit your need

– Want to drive competition amongst bidders e.g., reverse auction

– You need to have a quick answer

– Price is the discriminator

Risks

– You won’t know about or have access to innovative solutions

– Limit your opportunities to bring new suppliers into the mix

– Can’t afford the response

– Limit your evaluation to price

| 12



RFP

| 13

Assumptions

– Buyer knows what’s best

– Buyer drives innovation

– Buyer retains control

– Success is primarily compliance and cost savings (Buyer)

(I know what I want)

Risks

– Bidder may be saying “yes” just to get their foot in the door

– Bidder already holds some contracts and wants more of the pie

– Bidder intends to figure it out as they go along

– Bidders are restricted to limitations of scope defined within contract



RFS

Assumptions

– Bidders know enough to figure out what’s best

– Bidders are innovative

– You’ll know it when you see it (Buyer)

– Buyer willing to release some control to get more innovation

| 14

(I don’t know best answer)

Risks

– Bidders don’t truly have viable, innovative solutions

– Bidder responses are difficult to compare

– Negotiations are complex

– May still need to perform a RFP



Mature organizations have more options

Stage 3:

Contributor

Stage 2:

Order

Fulfiller

Stage 1:

Ad Hoc

Nuisance

Deliver

basic

services

Deliver

on-time

support

Minimal understanding of business

Minimal process maturity

Difficult engagement model

Limited productive relationships

Silent supporting partner

Minimal negotiating skills

Minimal consulting skills

Modest goal alignment

Strong process maturity

Strong negotiating skills

Continuous alignment

A seat at the table

Deliver

business

value

15

Stage 4:

Trusted

Advisor

Strategic partnerships

Champion of change

Strategic alignment

Strong influence with the business

Creating &

sustaining an

innovative

culture

RFS, RFP,

RFQ, RFI

Maturity

LevelSolution

Capability

RFS, RFP,

RFQ, RFI

RFS, RFP,

RFQ, RFI

RFS, RFP,

RFQ, RFI



How to perform an RFS

Issued only to your Strategic Innovator Partner suppliers

Describe current environment to bidders

Describe business challenge that needs to be resolved

Key success criteria

Define any constraints, policies, security, etc. and “deal killer” Terms

Ask how would they solution your problem

Collaborative SOW development from proposal

Open dialog with bidders on price margins

| 16



RFS achieves better results faster with less effort

Conceptual resource timeline: RFP vs RFS E

ffort

Time

DevelopEvaluate

NegotiateTransition

Govern

RFP(Request For Proposal)

RFS(Request For Solution)

DevelopEvaluate

Negotiate

Transition

Govern

RFP: promulgates a solution that bidders must comply with and the

buyer chooses best value bid

RFS: seeks innovative responses to resolve business challenges and

buyer chooses the best solution to negotiate with (more open book)



Discuss…

How can you see an RFS working in your company?

Do you have success or failure stories to share?

What industries lend themselves to this best?

| 18



Thank you!

| 19

Lawrence Kane

Senior Leader

ITI Strategy, Sourcing

The Boeing Company

Phone: (425) 865-7516

E-Mail: [email protected]

Paul Becker

ITI Sourcing

Phone: (425) 505-8995

The Boeing Company

E-Mail: [email protected]

mailto:[email protected]




About the presenters…

| 20

Lawrence Kane is responsible for IT Infrastructure Strategy and Sourcing at Boeing. He established the sourcing office, hired and developed a high-performance team and saved more than $2.1B by architecting the IT infrastructure sourcing strategy, designing the proposal evaluation process, executing RFPs, negotiating with providers and benchmarking the effectiveness of resultant deals. He is also the best-selling author of more than a dozen books.

Paul Becker is responsible for IT Infrastructure sourcing strategy at Boeing. Boeing partner manager support for RFx sourcing development and negotiation on contracts valued at over $250 million annually. Established and implemented transition strategy for an sourced service delivery vendor center in the abroad. Supported contract change management, negotiations, and governance for large multi-national companies Delloite & Touché and Verizon Communications.



For Further References:

“Top Ten: Biggest Lies in Outsourcing”

– http://outsourcemag.com/top-ten-biggest-lies-in-outsourcing/

“The RFP Will Never Be The Same”

– www.isg-one.com

“Getting To We”

– Amazon Books

– Kate Vitasek

International Associate Outsourcing Professionals (IAOP)

– https://www.iaop.org/

| 21

http://outsourcemag.com/top-ten-biggest-lies-in-outsourcing/

http://www.isg-one.com/

http://www.amazon.com/Getting-Negotiating-Agreements-Collaborative-Relationships/dp/1137297182/ref=sr_1_10?ie=UTF8&qid=1426877399&sr=8-10&keywords=getting+to+we+book

https://www.iaop.org/

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Session #46

Sourcing Innovation Conundrum:

Build Proposals That Deliver Innovation to You

Speakers:

www.sig.org/eval

Paul Becker

ITI Sourcing

(425) 505-8995

The Boeing Company

[email protected]

Lawrence Kane

Senior Leader

ITI Strategy, Sourcing

The Boeing Company

(425) 865-7516

[email protected]



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