The CFO should be the biggest proponent of an Optimized Sourcing Strategy; In particular a strategy that is focused on the composition of product and technology teams.
Why? Because the capital spent on resources is likely the highest cost for the organization and least optimized. Any inefficiencies that exist in the organization’s sourcing strategy model should be eliminated. The gains, though small and incremental, become exponential over the long run. Capital could be freed to invest in high value business objectives without impacting deliverables or quality. Any optimization gains will give the organization an advantage.
Implementing this type of a strategy requires more than an a few speeches and PowerPoint presentations from leadership. There needs to be a single leader, owner, accountable person for such an initiative. This person must be persuasive, organized, well connected in the organization. The leader will be setting KPIs, driving the change, and managing the data for reporting. Success will likely depend on a set of tools in place to manage all the data, outcomes, and variables. It is also recommended you have a coach or specialized consultant on hand to build a solid foundation.
Though the office of the CFO should be the biggest proponent of and Optimized Sourcing Strategy, they should not own the initiative. A group or person much closer to the products and technology teams is ideal. Finance certainly has their part in setting financial boundaries and controls, but they are not ideal for determining the proper mix of the teams. To be clear – this is not entirely a financial exercise, it is about optimization. An example below illustrates this point:
A team that supports a product scheduled to sunset in a few years should have a strong financial component when setting up the optimization parameters. The idea here would be to maximize the capital every step of the way until a minimum steady states is achieved.
In contrast, a product in growth but with a team that is almost entirely using an onshore / offshore model with very few employees may want to invest in a core team of employees to minimize intellectual property risk and knowledge transfer costs associate with high levels of attrition. This would increase the capital needed for the team, but optimize the team through reduction of risk.
This point also reinforces the need to have a leader closer to the dynamics and needs of product and development teams but yet savvy in finance. There just needs to be a balance to find the right optimization sourcing strategy in an organization.