Multisourced IT operating models are increasingly common and offer many potential benefits. In contrast to inflexible single-sourced models, multisourcing allows a client to incentivize providers to lower costs and leverage innovative industry developments such as cloud and standard services. In multisource arrangements, moreover, clients can select “best of breed” service providers for bundles of IT services based on each service provider’s individual strengths.
A multisourced operating model also presents some challenges, as individual teams (both in-house and outsourced) can act autonomously and lack coordination across the enterprise. The resulting fragmentation complicates the task of integration and governance, which is essential to delivering effective services.
One risk of governing and integrating services from multiple insourced and outsourced suppliers is that issues fall into the gaps between service providers, leading to finger-pointing behavior and poor overall performance. Service restoration times can suffer as service providers determine which service is down and who is responsible.
During problem analysis, service providers can focus on attributing blame rather than identifying the root cause. Without effective governance, policies and standards often are ignored or inconsistently applied across the estate. Lacking incentives to collaborate, service providers can become focused on competition to the detriment of providing services to the client.
Another issue is that disparately managed requirements create complex and heterogeneous IT estates and increase demand for resources. In this time of austerity, meanwhile, CIOs face increasing pressure to demonstrate cost efficiency. Limited control over demand, however, means limited control over the total cost of IT. Cost savings realized through standardization of IT estates are therefore at risk if demand for nonstandard services is not managed. That said; legitimate business requirements for specialized services must be provided efficiently by the component providers in a multisourced operating model.
One way to address the challenges posed by multisourcing is through a discrete Service Integration and Management (SIAM) function. An effective SIAM function enables organizations to take advantage of the flexibility and innovation of multisourcing and standard services while delivering integrated services to the business.
SIAM ensures multiple service providers (internal and/or external) deliver services to multiple businesses in a cohesive and efficient manner. An effective SIAM function maximizes the performance of end-to-end IT services to the business in the most cost-effective manner.
The cross-enterprise process ownership, responsibility and accountability that SIAM enables are essential. Lack of clear ownership can lead teams to use process rules and guidelines to pass tasks on to each other without understanding the overall risk to the business. The result is a “hot potato” culture, where everyone does his or her job but the overall service fails to meet business expectations.
SIAM acts as the central point of control between demand and supply, and plays a pivotal coordinating role in all service management processes.
Examples include the delivery of new cross-supplier services, the resolution of incidents affecting services across multiple service providers and coordinated disaster recovery.
In addition, SIAM acts as the gatekeeper to enterprise-wide IT services by enforcing change, security accreditation, testing and release processes. As such, SIAM assures the readiness of all changes made to the IT estate. Adopting a zero-tolerance approach to any non-adherence to SIAM processes protects the integrity of an organization’s IT estate.
Effective SIAM enables flexibility in the service provider and business landscape by maintaining a uniform framework of processes, governance and supporting tools, including an enterprise-wide, federated configuration management database (CMDB) capturing the relationships between business areas and IT services. This enables effective exit management of providers and the introduction of new providers. Similarly, SIAM facilitates the separation of an existing business from, or the integration of a new business into, the organization's landscape.
The service integration challenge is common to almost all organizations and goes beyond IT. Given the investment required to design and build SIAM processes and toolsets, leveraging the previous work of outsourcers often makes sense. However, outsourcing the SIAM function is one of several potential models to address service integration.
For example organizations with mature retained functions and significant supplier management expertise may be better suited to perform more elements of service integration in-house, potentially with some resource augmentation. For some organizations service integration is a key differentiator; these organizations may choose to not only retain, but to specialize in service integration.
Given the numerous options available, the best approach is to assess business drivers, maturity and capability in order to determine the model which best fits a particular organization.
Hannah Patterson, a Principal Consultant at ISG, specializes in Service Management and Integration (SIAM) in multi-sourced IT operating models. Over the last 7 years she has guided clients from various industry sectors through the lifecycle of defining and implementing IT sourcing transformations, including the design of operating models, construction of change plans and contract negotiation. Specific areas of expertise include architecting and successfully delivering standard service solutions resulting in significantly reduced operating costs and improved service quality.
Prior to joining ISG, Patterson was an independent consultant for over 10 years, working with clients at a senior executive level on a variety of IT projects and programs. She has specialized in turning around failing programs and has led major re-planning exercises, including delivering series of workshops for 150 plus attendees. Patterson holds a Bachelor of Science, with honors, in Biotechnology from Kings College London University.