Letter P: Pay for Performance not Presence - Zibert

This aphorism ties in with A, D, E, and G. It is critical to ensure that in your sourcing contract you have a mechanism which has an incentive for the provider to perform, not simply to go through the motions. Equally as important is to ensure you have a Performance Management system for your staff which is aligned to the value extracted from providers.

Letter O: The Organisational Rosetta stone is finance - Zibert

The bottom line here is that if the sourcing deal does not stack up financially it does not matter what other benefits are perceived the relationship will not survive. A sourcing relationship must have a clear and transparent financial benefit. This is the first law of sourcing which was articulated by Coase.


Coase’s Law
Coase's Law states that a company will purchase goods and services from suppliers (that is, outsource work) if the suppliers' costs, plus the costs of completing such transactions, are less than the costs of getting identical work produced by a company's own employees.

This aphorism must be tempered by the common law of business balance.

The Common Law of Business Balance from John Ruskin.
It's unwise to pay too much, but it's worse to pay too little. When you pay too much, you lose a little money -- that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot -- it can't be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.

This is a classic quote on the possible folly of automatically choosing low cost as the best way to make a purchase decision. It appeals to those who believe, or who want to persuade others to believe, that price is a possible indicator of quality.

This aphorism is linked to ‘R’.

Letter N: Nothing fails like success – Gerald Nachman

In sourcing this is a hidden killer. The best sourcing relationships should be invisible to the customer. The more successful the sourcing relationship the more invisible it becomes. This is also seen in sourcing governance. In successful sourcing relationships you often get the customer and provider saying, ‘Well, everything is going well, so I don’t see the point in holding these meetings any longer’. What should happen is that the focus must change from a typically rear-view transactional approach to a proactive strategic approach. This change in focus has proven extremely difficult for both providers and customers alike to manage.

In sourcing it is the successful relationships which are often the target for cost cutting by new C-level executives. It is human nature to notice pain, and unfortunately when no pain is obvious it is assumed there can be further cost savings. Try to avoid this trap. Placing your firm into a strategic coma is not a wise business decision.

This maxim is related to the Peter Principle, which says: "In a hierarchy, every employee tends to rise to his level of incompetence."

This aphorism is linked to ‘I’.

Letter M: The optimum committee has no Members - Augustine’s Law #31

In this millennium a credible sourcing management alphabet must contain an explicit aphorism on governance. Sourcing governance has only 3 elements; People- the right number and type; Processes- a comprehensive set; and Tools – meeting structure. collaboration site, and minutes. Good sourcing governance ensures that the transactional part of the relationship (right invoice, SLAs met, projects on track, etc) is completed with the utmost discipline to ensure resources have more time to devote to innovation and other proactive activities.

Very few have made this leap successfully.

Letter L: The Letter of the Law brings death, but the spirit brings life - Corinthians (2 Cor 3:6)

The contract is the summon bonnum for an effective sourcing relationship. It is the Rule Book. Too often I hear that the best relationship is one where the contract is signed and then put into a draw and never referred to again. This is a delusion for both the provider and customer. The best relationships are those that have a contract which is aligned with the strategy of the firm. As the firm’s strategy changes over time one must therefore expect to change the contract to maintain the synchronicity. The healthiest sourcing relationships constantly amend/delete contract clauses to make them clearer to both parties. This is a natural and healthy reflection of a good and mature relationship.


“How successful would you be at football if you didn’t know the rules of the game?”
Sourcing is a commercial relationship. The rules of the relationship are detailed in the contract.

This aphorism is linked to ‘S’.

Letter K: Ignorance more frequently begets confidence than does Knowledge – Charles Darwin

IT tends to be the playground of the young. Partly this reflects the tremendous rate of change in the IT environment. One of the side-effects of this is that there is a predilection to jumping in and testing the depth of the water with your head. Not a wise move.


This aphorism is linked to ‘B’.

Letter J: No methodology can substitute for good Judgement - McKinsey

The beauty of this aphorism lies in its author. In IT Management there exist a few methodologies, such as ITIL, COBIT, and CMM. It is important to understand what is critical to your firm’s success and how the methodology can best support or strengthen this. Slavishly or religiously applying a methodology for its own sake is fraught with problems. The biggest one being IT yet again violating aphorisms A and D.