Adidas_Akhil_Banoth

.docx

School

Clark University *

*We aren’t endorsed by this school

Course

3410

Subject

Information Systems

Date

Jan 9, 2024

Type

docx

Pages

Uploaded by JusticePolarBearPerson973

Adidas group: IT Multi- Sourcing at adidas 1 Adidas group: IT Multi-Sourcing at Adidas Akhil Banoth MSIT 3410_01_F23 – IT STRATEGY LEADERSHIP 11-7-2023 Professor: Gene Grella

Adidas group: IT Multi- Sourcing at adidas 2 Introduction: Adidas is a major global sportswear company based in Germany. In the 1990s and 2000s, Adidas relied on a single Indian vendor called Alpha for its IT needs. However, in 2010, Adidas adopted a multi-sourcing strategy by adding two more IT vendors - Beta and Gamma - with the goals of reducing costs, improving quality and innovation, and reducing overreliance on one vendor. The case study analyzes Adidas' challenges in implementing this new multi-sourcing strategy and sustaining competition and collaboration among the three vendors over the long run. It evaluates options like adding more vendors, setting up a captive center, restructuring the IT organization, and contract changes. Finally, it recommends setting up a captive center as the best course of action to enhance capabilities, access talent, exert more control over critical IT functions, and sustain vendor competition. Identify the most important facts surrounding the case: Adidas had relied on a single Indian vendor, Alpha, for its IT needs since the 1990s. This long- term single-sourcing relationship provided benefits such as lower costs and deep domain knowledge. However, by 2010, Alpha had become complacent, and Adidas decided it needed to change its strategies. Adidas adopted a multi-sourcing approach by adding two additional vendors – Beta and Gamma. The goals of this new strategy were to reduce IT costs, improve quality, increase innovation, and reduce overreliance on one vendor. Onboarding these new vendors proved challenging for Adidas due to internal resistance from managers accustomed to working with Alpha and difficulties developing relationships with the

Adidas group: IT Multi- Sourcing at adidas 3 new vendors. However, by 2013, Adidas had managed to overcome these challenges. The multi- sourcing strategy led to a 20% reduction in IT costs and a 50% improvement in quality. However, sustaining competition and collaboration among the three vendors remained an ongoing concern. To address this, Adidas was considering further moves, such as adding a fourth vendor or setting up its captive center in a low-cost country. The goals of these moves would be to enhance capabilities further, exert more control over critical IT functions, and keep vendors competitive. However, potential risks include issues integrating the captive center and managing non-core operations. Identify the key issue or issues: The key issues are:  How to sustain intense vendor competition in the long run?  How can we foster vendor collaboration while motivating them to invest in the relationship?  Whether to add a 4th vendor or set up a captive center to further improve capabilities and competition? Sustaining Vendor Competition A major ongoing issue is how Adidas can sustain intense competition among its vendors over the long term. As vendors get comfortable, the competitive dynamic could diminish. Adidas needs to find ways to incentivize vendors to vie for business and prevent complacency continuously.

Adidas group: IT Multi- Sourcing at adidas 4 Fostering Collaboration and Motivation Relatedly, Adidas must foster collaboration among vendors on critical integrative tasks while ensuring vendors remain motivated to invest in the relationship. As business is split across vendors, Adidas must provide sufficient scale and opportunity to each vendor to keep them engaged in the partnership. Enhancing Capabilities and Competition Finally, a key issue is whether Adidas should further enhance its capabilities and competition by adding a fourth vendor or setting up its captive center. Adding another vendor could prevent existing vendors from becoming too entrenched. A captive center could allow Adidas to exert more control over critical functions, access new talent pools, and keep vendors on their toes. However, it also comes with risks around managing non-core operations. Specify alternative courses of action: There are some alternative courses of action Addidas can take to address: Restructuring Internal IT Organization One option is restructuring the internal IT organization to consolidate roles like development, testing, and support across the vertical business units. This would provide more scale to vendors in each area and allow Adidas to exert more control over critical functions. However, it may reduce alignment between IT and specific business needs.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help