IIn the aftermath of rapid technology developments, every business worth its salt is moving towards a multi-sourced operating model to reduce costs and increase capability. But multiple suppliers give rise to a complex environment where ensuring seamless delivery is a challenge. Service integration is an art that involves tying together service components and suppliers for seamless services. However, lately, fragmented Service Integration and Management (SIAM) has become common. To derive more value from SIAM, a transformational appetite for implementing a SIAM strategy is necessary—one that streamlines change management, invests in transformation, and enables collaborative relationship management.
The Rise of Multi-Supplier Ecosystems
This is an age where keeping pace with technology and market change calls for extensive partnerships. A typical business today depends on more than one IT service provider, internal or external, to leverage best-of-breed services. In many cases, more than five IT service providers cater to a single business. However, while businesses have been quick to reap cost benefits by taking advantage of services from multiple providers, they have overlooked the complexity of managing them.
Sound governance and integration are essential to ensure smooth flow of services from different providers. Without effective integration, service providers could easily point fingers at other service providers. In case of service disruption, the organization must be able to identify the root cause. Without effectively integrated services, determining which service is down and who is responsible can prove to be arduous.
Sound governance ensures that all service providers are focused, accountable, and motivated to provide services as laid down and agreed upon. During changes, establishing project management offices (PMOs) is essential for better governance and coordination. Else, the benefits of using competitive providers are eventually offset by complexity as businesses need to reduce overhead costs, and increase speed and agility.
As the complexity of the technological landscape increases, demand for business agility, cost-effectiveness, and next-generation services also increases. Adopting a SIAM-based approach can prove to be a core differentiator.
In this whitepaper, we discuss the challenges in outsourcing and how SIAM plays a key role in deriving value from services and the multitude of service providers.
The Tipping Point in Sourcing: Service Integration and Management
Organizations need to find a way to efficiently manage multiple suppliers. There was a marked shift in this direction over the last few years with businesses focusing on vendor consolidation by restricting the number of suppliers they engage with. This was a period when service integration as a concept evolved and a number of service providers started pitching themselves as service integrators. At this point, concepts of Service Management Integration (SMI) and Multi Supplier Integration (MSI) emerged. Most leading service providers or service integrators created their own approach or model around SMI.
Gartner and Forrester have been advising customers to relook at their sourcing strategies and partner with vendors who co-exist and create value by sharing risks and rewards that the organization experiences and achieves.
As we see the shift from industrialized IT to digitized IT, old frameworks or models fade and new ones emerge. At the first level, time and material-based organizations aspire to do project-based work; whereas at the second level, they aspire to grow from project-based organizations into System Integrators (SIs) that take on complex responsibility and handle higher risk. SIs need to reassess their forward journey and remain tactical while customers expect operational or strategic commitments. This means a shift in service integration and service management frameworks. In tune with these developments, the Open GeoSpatial Consortium (OGC) felt the need to have a framework or approach on service integration and management of service providers. They named it Service Integration and Management (SIAM). A work group was constituted to create a detailed SIAM.
A Service Management Organization (SMO) set up by mature organizations handles the SI function and ensures that they are followed. SMOs are more than project management organizations as they handle multiple SI programs to ensure some level of integration, and manage key operational service management processes (such as incident, problem, and change management) where interaction between multiple suppliers is required. From an organizational perspective, the services provided by these service providers predominantly lie in the operational layer of management and the service integrator lies in the operational and tactical layer of management. An effective SIAM ensures centralized service management and control of multiple service providers. One of the vendors plays the role of a lead supplier or lead service management integrator—delivering services in a cohesive and cost-effective manner.
When Looking for Effectiveness, Rely on the Four Rules
Four critical success factors for effective service integration and management are:
Proficiency in process architecture and management. An effective SIAM function should align itself with the organization’s corporate standards.
The SIAM function should define the process and toolset integration requirements so that service providers can integrate their services effectively with other service providers. There is no need for service providers to dictate how they deliver services.
The service integrator should act as an agent providing services independently from other service providers. This means that the service integration function is a separate entity from the service providers.Organizations must maintain two independent teams with distinct leadership and different incentive structures to deliver SIAM and operations or development functions. Two independent teams will help them in putting delivery onus on the service integrator. To effectively deliver services, the integrator should understand the business and provide an integrated set of tools to allow service providers to feed correct information into SIAM and support common processes. Organizations with mature processes and functions and significant supplier management expertise do not outsource the SIAM function as opposed to organizations with immature service management processes.
The investment required to design and build SIAM processes and tools is high. So, it is wise to leverage the previous work of outsourcers to deliver business value.
From Operational to Strategic: Use SIAM for Complete Control and Management
SIAM is an approach that drives service management from a strategic perspective. It provides greater control and flexibility to not only manage suppliers but also IT and business services. It is more like a mechanical control system that creates a layer for effective communication, management, feedback, and control between the business and the suppliers. With SIAM outsourced, organizations retain the role of setting policies and disseminating business direction and strategies across all suppliers.
Another SIAM role is to provide governance, management and regulation of suppliers and business services in keeping with the policies of the organization. This enables organizations to become flexible enough to simplify the transition due to change of service providers or due to change in business services, systems, and processes due to mergers and acquisitions or demergers and spin-offs. Business-oriented transformations happen easily across suppliers and business services with SIAM.
SIAM spans all management layers—operational, tactical and strategic. This means that the SIAM function is applicable to all the functions and processes of the business and IT services provided by multiple service providers, internal IT or external suppliers. Customers who are keen to move ahead and take advantage of cloud services or develop digital services in their organizations need to work on and develop SIAM processes. Vendors offering services need to prepare well to adapt to the SIAM function and deliver new ideas, more value.
Avoid Pitfalls, Reap Rewards
Organizations that decide to outsource their services are often tempted to quickly transition service responsibility to their service providers expecting to reduce cost. The role of a service integrator, especially in such cases is extremely important. Without effective service integration, a black hole quickly forms and all issues fall into it. The result is lack of accountability, poor performance, and benefit leakage. Complete integration and sound governance is thus essential to deliver effective services and maximize the benefits of outsourcing. SIAM plays a key role in ensuring that the service provider ecosystem within the organization is effectively managed and standard services are implemented. In a way, understanding the roles and responsibilities of your SIAM function is the first step towards reaping the rewards and avoiding the pitfalls.