I read CIO's Outsourcing Trends To Watch in 2010 with great interest given what I do for a living. The overall article was not surprising however one section certainly caught my eye. Here's the except:

• Multi-Sourcing Malaise. Multi-sourcing seems ideal in theory—work with best-in-class IT service providers and keep costs in check, thanks to the competition. In reality, it's been difficult at best and disastrous at worst for many customers."Organizations are reassessing their approach to selective sourcing and multi-sourcing, and realizing that they need to have a certain level of maturity in terms of processes, governance and vendor management in order to make the multi-vendor model work," says Bob Mathers, senior consultant with Compass America. "Organizations that have pursued multi-sourcing without investing in management capabilities are finding themselves longing for the problems they used to have with their one and only vendor." Watch for reevaluation and restructuring of these relationships next year.

Upon first began reading this section I thought "No way, is he going to say that multisourcing isn't going to work?" (I'm a huge proponent of multivendor environments and elude to that in my newsletters and even in one or more of my earlier blogs). Then I read the section again.

And what Bob Mathers is saying makes a lot of sense. Multivendor environments are not for the small or immature organizations. I mean that part is quite well understood by most of you out there who know that managing one vendor is difficult with the limited resources you have so how would you manage five providing the same type of solutions with the same limited resources you have to keep oversight and ensure all are performing to satisfaction. I get that.

And I also get that maturity in processes, governance,, etc. is required for a multivendor environment to work.

But where I differ with Bob Mathers is in the statement saying that organizations who've pursued multivendor relationships long for the days when they had only one vendor to deal with. I don't know about that. And the reason I say that is because, even with the overhead management of multiple vendors, companies always benefit from having multiple sources to choose from. Rather than putting all your eggs in one basket as used to be the case, spreading them out across different baskets with varying levels of involvement makes a lot of sense.

The benefits are that if one vendor doesn't perform, there's always another one ready to select from without having to go through tedious vendor selection processes.

Also, multivendor environments allow cost benefits to clearly come through up front because vendors can compete with each other to win new projects based on established prices.

Bob Mathers also states that "Multi-sourcing seems ideal in theory—work with best-in-class IT service providers and keep costs in check, thanks to the competition. In reality, it's been difficult at best and disastrous at worst for many customers."

This is where I find myself disagreeing with Bob Mathers too. If the contracts were written properly up front, and if the costs were negotiated properly upfront, then in reality, customers should have no issues managing those relationships effectively even with a limited resource pool.

Multisourcing isn't for the faint-hearted or for the company that is not mature in its processes but even a small company can benefit from a multivendor environment IF the initial foundation in the form of contractual agreements, Service Level Agreements, Rate Cards, and Processes is laid strongly.