“90% of Outsourcing Deals Lose Over Half Their Value—Here’s Why”

According to Ernie Zibert’s research, the problem isn’t outsourcing itself—it’s how we manage it.

📊 A survey of 100+ IT professionals revealed:

• 50% cite low customer satisfaction as the biggest issue
• 90% believe 60% or more of expected value is lost over the lifetime of an outsourcing deal
• Shockingly, 1 in 3 say 100% of value disappears,

The takeaway? Poor governance erodes value. If you’reoutsourcing, rethink your approach today. Implement strong sourcing governance frameworks and tools like the Sourcing Compass to turn things around.

What’s the real difference between a $1 Million and a $1 Billion IT sourcing deal?

Surprisingly… almost nothing.

Whether you’re negotiating a small agreement or a mega-deal, the fundamentals remain the same:

✅ Contract clarity
✅Performance accountability (SLAs)
✅Transparent invoicing
✅Demand management
✅Relationship governance

Scale adds complexity—but the playbook doesn’t change.

If you’re a CIO, vCIO, VMO manager, or sourcing leader, focus on these five pillars and you’ll win—regardless of deal size. Enjoy the listen.

Are you still measuring outsourcing success by cost alone?
That’s a trap many organizations fall into—and it leads to missed opportunities, unhappy customers, and stalled innovation.

In my latest piece, I break down the Five Dimensions of Sourcing Value—a practical model that helps you:
✔ Reduce value leakage
✔ Align sourcing with strategic priorities
✔ Balance trade-offs between cost, flexibility, andcustomer satisfaction

Key takeaway: Outsourcing isn’t just about saving money. It’s about knowing where your Sourcing Value Compass points—and why.

Unlock the Science Behind Sourcing Governance 🚀

Most organizations spend 70–80% of their IT budgets just “keeping the lights on”—and the same inefficiency plagues sourcing governance. The result? Strategic forums are often cosmetic, while operational meetings dominate. This imbalance costs businesses 15–50% of annual contract value in lost opportunities.

It’s time for a shift.
✅ People – Invest at least 5% of ACV in governance resources and ensure clear accountability.
✅ Processes – Own the right governance processes (Contract, Issues, SLAs, Invoice, Service Requests).
✅ Tools – Structure governance meetings with discipline and transparency using formulas like Fmtg = (Frequency, Type, Duration).

Good governance = clarity on “who talks with whom, about what, and when.”
When done right, sourcing governance moves from a rear-view mirror IT agenda to a proactive business value engine.

💡 Key takeaway: Effective governance isn’t optional—it’s the foundation for safer, cheaper, faster, smarter, and greener IT decisions.

Sourcing Success: The Three Fates Every IT Leader MustMaster

🔮 Are your sourcing strategies guided by fate—or by design?
Drawing inspiration from Shakespeare and centuries-old wisdom, my latest piece, Sourcing’s Three Fates, explores the three critical forces that shape every sourcing relationship:

TINA (There Is No Alternative)

SAM (Sourcing Account Management)

DAE (Dollars Are Everything).

Whether you’re a CIO, procurement leader, or businessstrategist, understanding these “fates” is essential for driving value, managing risk, and achieving sustainable savings.

Key Takeaways:

• TINA: Every organization sources—make sure your agreements are clear and aligned with business needs
• SAM: Relationship management is dual-sided; governance and adaptability are vital for success
• DAE: If the dollars don’t add up, the deal is doomed. Financial rigor is non-negotiable.

💡 Pro Tip: Don’t let your sourcing journey become a tale of “double, double toil and trouble.” Clarity on TINA, SAM, and DAE is your roadmap to success.

Outsourcing can unlock efficiency and cost savings—but italso hides two costly evils:

🔍 Paying for Nothing🔍 Paying Twice for Something

From inflated SLAs to duplicate software licenses, these traps quietly drain budgets and erode value. In his guide Outsourcing’s Two Evils, Ernie Zibert shares practical strategies to avoid them:

✔ Audit your agreements—cancel overlapping maintenance and warranties.
✔ Right-size SLAs—don’t pay for 99.99% uptime if 99.9% meets business needs.
✔ Avoid prepaying for services—negotiate discounts based on actual spend.
✔ Clean up billable objects—unused AD accounts and SaaS seats inflate costs.
✔ Align backup strategies with business risk—ditch redundant layers.

The moral? Clarity and vigilance will save thousands if not millions. Enjoy the listen.

Why “Lowest Cost” Outsourcing Could Be Your Biggest Risk

When it comes to outsourcing, chasing the lowest price often feels like a win—until reality hits. According to Ernie Zibert’s Sourcing Value Compass, the five dimensions of sourcing value—Financial Benefit, Market Discipline, Flexibility, Specialization, and Customer Satisfaction—are deeplyinterconnected.

Here’s the kicker:

• Lowest cost ≠ best deal. It often comes bundled with poor performance and rigidity.

• The relationship between price and satisfaction follows a U-curve: too cheap or too expensive, and satisfaction plummets.

• Push suppliers too hard on price, and you invite the “sourcing nightmare”—scope creep, reduced service quality, and hidden costs.

Pro tip:
Focus on Finance vs. Market Discipline first. Make sure price reflects performance. If your business is transforming fast, invest in Flexibility—it’s your insurance against future constraints.

💡 Want to dive deeper?Check out Ernie Zibert’s insights on sourcing strategy and governance.

🚀 Why P5 Pricing is the Future of IT Managed Services

For over two decades, IT pricing has been dominated by P x Q models—Price × Quantity. While functional, these models fail to align IT costs with actual business demand. Enter P5: Price per Period per Person—a game-changer for transparency and scalability in IT services.