ASSEMBLING THE JIGSAWService Integration and Management in a Multisourced ITOperating ModelHannah Patterson, Principal Con...
INTRODUCTIONRecent developments in utility-based IT contracts, standardized services andcloud computing are driving consid...
THE NEED FOR SIAM                                            THE ROLE OF SIAMMultisourced IT operating models are increasi...
Businesses                                                              Business forecast demand                          ...
SIAM SUCCESS FACTORS                                           contracts and acting in an assurance role above SIAM and   ...
SIAM IMPLEMENTATION CHALLENGES                               We have seen a dual approach taken in the provision andAlthou...
KEY SUCCESS FACTORS                                         2. A robust program and project structure, including:1. A cons...
LOOKING FOR A STRATEGIC PARTNER?  FURTHER READING         For further information on the benefits achievable through stand...
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Assembling the Jigsaw: Service Integration and Management in a Multisourced IT Operating Model


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Assembling the Jigsaw: Service Integration and Management in a Multisourced IT Operating Model

  1. 1. ASSEMBLING THE JIGSAWService Integration and Management in a Multisourced ITOperating ModelHannah Patterson, Principal Consultant,
  2. 2. INTRODUCTIONRecent developments in utility-based IT contracts, standardized services andcloud computing are driving considerable savings out of IT budgets. ISGanalyses of large global organizations have identified potential savingsexceeding 40 percent. Additional benefits include the ability to addressspecialized needs of different business models and to integrate best-of-breedproviders. However, to sustain these benefits, strong operational andcommercial governance processes are essential. Indeed, the benefitsachieved through leveraging a service provider’s standard service offeringscan be rapidly undone without effective controls in place.In multisourced IT operating models, where technology services are providedby myriad teams or organizations, ensuring seamless delivery presents achallenge. One way to address this challenge is through contracting for adiscrete Service Integration and Management (SIAM) function. An effectiveSIAM function enables organizations to take advantage of the flexibility andinnovation of multisourcing and standard services while delivering integratedservices to the business.This ISG white paper discusses the challenges and key success factors relatedto service integration and governance functions within multisourced IToperating models.COMPLETING THE JIGSAW ■ HANNAH PATTERSON 1
  3. 3. THE NEED FOR SIAM THE ROLE OF SIAMMultisourced IT operating models are increasingly A service integration function specifies the servicecommon and offer many potential benefits. Single- management processes and procedures to be deployedsourced models provide little flexibility in addressing across the enterprise and ensures they are followed.rapidly changing business objectives. Multisourcing SIAM ensures multiple service providers (internal and/ orallows a client to move from “indispensible” single external) deliver services to multiple businesses in aservice providers to take advantage of competitive cohesive and efficient manner. An effective SIAMservice provider behaviors that drive down costs and function maximizes the performance of end-to-end ITincentivize service providers to leverage innovative services to the business in the most cost-effectiveindustry developments such as cloud and standard In multisource arrangements, moreover, clients ITIL V3 provides a strong framework for implementingcan select “best of breed” service providers for bundles SIAM, as it covers the complete lifecycle of services andof IT service based on each service provider’s individual is recognized by most IT suppliers. Because ITIL is notstrengths. prescriptive in its application, a service managementA multisourced operating model also presents some structure such as SIAM is needed to translate the ITILchallenges, as individual teams (both in-house and framework into working practices with clear bounds ofoutsourced) can act autonomously and can lack responsibility.coordination across the enterprise. The resulting Due to the similarity in scope, some executivesfragmentation of service delivery complicates the task of mistakenly equate an ITIL implementation with theintegration and governance, which is essential to establishment of a SIAM equivalent. However, effectivedelivering effective IT services. service management requires all roles andOne risk of governing and integrating services from responsibilities of the parties involved across the ITmultiple insourced and outsourced suppliers is that operating model and the associated governance andissues fall into the gaps between service providers, control mechanisms to be clearly defined andleading to finger-pointing behavior and poor overall unambiguous—something that ITIL alone does notperformance. Service restoration times can suffer as achieve. IT service management processes should be inservice providers determine which service is down and place across all organizations involved in the IT operatingwho is responsible. During problem analysis, service model, with SIAM in the center coordinating theproviders can focus on attributing blame rather than enterprise.identifying the root cause. Without effective governance, The cross-enterprise process ownership, responsibilitypolicies and standards often are ignored or inconsistently and accountability that SIAM enables are essential. Lackapplied across the IT estate. Lacking incentives to of clear ownership can lead teams to use process rulescollaborate, service providers can become focused on and guidelines to pass tasks on to each other withoutcompetition to the detriment of providing services to the understanding the overall risk to the business. The resultclient. is a “hot potato” culture, where everyone does his or herGovernance must address both the supply and demand job but the overall service fails to meet businessof IT services. Highly disparate IT requirements create expectations.complex and heterogeneous IT estates and increase SIAM acts as the central point of control betweendemand for IT resources. In this time of austerity, demand and supply. For Demand and Capacitymeanwhile, CIOs face increasing pressure to Management, as an example, Figure 1 demonstrates howdemonstrate cost efficiency. Limited control over IT Service Management (ITSM) is in place across thedemand, however, means limited control over the total enterprise, under the control of SIAM. SIAM’s servicecost of IT. Cost savings realized through standardization management structure similarly coordinates roles acrossof IT estates are therefore at risk if demand for the organizations for all SIAM processes.nonstandard services is not managed. That said,legitimate business requirements for specialized servicesmust be provided efficiently by the component providersin a multisourced operating model.COMPLETING THE JIGSAW ■ HANNAH PATTERSON 2
  4. 4. Businesses Business forecast demand SIAM aggregates demand from separate businesses within the organization Demand SIAM translates the business activity forecasts and Supply Service Integration disaggregates the information, giving each service and Management (SIAM) provider the necessary information for its capacity planning IT service providers plan their activity to address the business demand, providing SIAM with their capacity plans SIAM assures the plans and communicates the end-to- Suppliers end enterprise capacity plan to the client Figure 1: An example of IT Service management across the operating modelSIAM’s coordination role is pivotal 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 disasterrecovery.SIAM acts as the gatekeeper to enterprisewide IT services by enforcing change, security accreditation, testing and releaseprocesses. As such, SIAM assures the readiness of all changes made to the IT estate. Adopting a zero-tolerance approach toany 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 ofprocesses, governance and supporting tools, including an enterprisewide, federated configuration management databasecapturing the relationships between business areas and IT services. This enables effective exit management of providersand the introduction of new providers. Similarly, SIAM facilitates the separation of an existing business from, or theintegration of a new business into, the organization’s landscape.SYMPTOMS OF AN INEFFECTIVE SIAM FUNCTIONThe symptoms of an ineffective SIAM function are numerous and varied and can include: Releases made into the live estate prior to passing sufficient testing and accreditation Services in use without sufficient controls, such as agreed Service Level Agreements (SLAs) or invoicing mechanisms Ineffective or incomplete understanding of interdependencies between each component service, resulting in poor risk management (e.g., security, resilience, availability) Finance overwhelmed by incomprehensible invoices from service providers Poor coordination between providers for incident resolution, disaster recovery and test environment provision Lack of understanding of the relationships between business and technical services, resulting in irrelevant SLA reporting; a failure to meet required business outcomes; and an inability to assess the potential impact of changes Having numerous Help Desks for users to call or a single Help Desk that offers little more than call-logging Businesses holding direct relationships with service providers, causing the client’s IT department to have limited visibility of requests made and services provided Complicated procurement processes, extended delivery timescales and lack of control over spending Duplicated efforts when businesses request additional services that are designed in silosCOMPLETING THE JIGSAW ■ HANNAH PATTERSON 3
  5. 5. SIAM SUCCESS FACTORS contracts and acting in an assurance role above SIAM and all service providers. As such, the SIAM function acts asKey success factors of effective service integration and the client’s are similarly varied. The client’s retained IT department is responsible for:An effective SIAM provider should be proficient in ITSM Setting the policies and standards (commercial,and aligned to the client’s service management architectural, security and service design) to bestandards, such as ITIL. The integrator should be applied to the estateaccredited to ISO 20000 and assured by the client’sretained organization. ‒ SIAM defines the service management processes and procedures in accordanceObjectivity is essential. The integrator should act as the with the client’s standards.agent of the client, providing services independently ‒ SIAM governs the delivery of servicesfrom the other service providers. This may mean that the through the service management processes,service integration function resides in a discrete keeping the other service providers alignedorganization from the service providers, or that Chinese to the client’s policies and standards.walls are put up between the teams of a provider Selecting service providers and negotiating anddelivering both SIAM and operations or development. To maintaining the contractual relationships with alleffectively act as the client’s agent, the integrator should service providersdemonstrate a good understanding of the businessessupported and be able to provide an integrated set of Managing the service provider relationship at antools that allow the service providers to feed information executive level and the payment of serviceinto SIAM and support common processes (e.g. providers’ invoicesavailability alerts, incident tickets, change requests and ‒ SIAM performs the day-to-day suppliermanagement information relating to consumption of management activities.service). Overall risk management and controls assurance activities through a team that set the policies andClients should demand mature service management standards and holds ultimate accountability forprocesses from their SIAM provider; these processes will deciding whether solutions are to be accreditedbe enabled by service management tool sets and ready (e.g. security accreditation and compliance)for other service providers to integrate their servicemanagement tool sets into. Overseeing enterprise architecture that defines the business, data, application and, at theThe SIAM function will define the process and tool-set highest level, the technology architectures,integration requirements for other service providers, against which the service providers design andwithout dictating how they deliver services. A client who deliver their serviceshas a mature retained function, with significant supplier Managing service performance , e.g., by makingmanagement expertise, has no real need to outsource decisions about service improvement plans orthe SIAM function, while a client with immature service the implementation of service creditsmanagement processes may want to outsource. Giventhe investment required to design and build SIAM ‒ Enabled by reports from the SIAM processes,processes and tools, leveraging the previous work of e.g., for service level performanceoutsourcers often makes sense. Managing business relationships responsible for: ‒ Understanding the priorities of the organizationRETAINING ACCOUNTABILITY AND CONTROL ‒ Advising the client’s composite businesses onClients who move to an outsourced model often wish to how to drive benefits out of IT services andretain the SIAM function due to a fear of losing control. contractsWhere the client’s IT department retains key controls ‒ Defining business services (made up ofand decision rights, that fear is unfounded. The client’s IT technology services) to be made available viadepartment always will remain accountable to the the cataloguebusiness for providing the required IT services. WhereSIAM is outsourced, the IT department should retain therole of setting policies and standards, making decisions(and setting the rules for rule-based decisions), owningCOMPLETING THE JIGSAW ■ HANNAH PATTERSON 4
  6. 6. SIAM IMPLEMENTATION CHALLENGES We have seen a dual approach taken in the provision andAlthough the SIAM function is essential in the operating development of SIAM services, where the existing servicemodel of many organizations, most SIAM perpetuates while the new service is developed inimplementations encounter significant challenges. parallel, switching over to the new SIAM at a single pointIndeed, previous ISG research found that SIAM functions in time. With this approach the client will not receive anyrarely have processes that are clearly defined, benefit from the new SIAM during the build process,successfully implemented, regularly measured and which leads to a loss of confidence in the SIAM provider’simproved over time. ability to deliver.One challenge is that the role of SIAM often is Where the implementation of the service integrationmisunderstood, leading to mismatched expectations function is performed by a project team and the liveamong the client, the SIAM provider and the other services organization has no accountability for on-timeservice providers and businesses. Where everyone is delivery, delays can result from a resistance to change.expecting someone else to manage or resource delivery Conversely, live services organizations tasked withof tasks, the momentum required for successful and implementing SIAM can lack the project and programtimely delivery is lost. management expertise to drive delivery against an agreed plan, again causing delays. If the retainedIn some instances an organization will appoint a SIAM organization, business and other providers are notprovider contractually but then fail to empower the engaged early in the implementation of SIAM, delays canprovider as the agent, allowing for businesses and occur or the services implemented may not be trulyproviders to bypass SIAM as the central control point integrated across the parties.described in Figure 1. If the SIAM provider is unable toperform that role, the organization loses confidence inthe SIAM function and increasingly bypasses SIAM; thus, WHERE TO STARTthe organization spirals away from its target operating Organizations that make the decision to outsource aremodel. Contracts or agreements with other service often tempted to expedite the transition of serviceproviders must therefore include clearly defined service responsibility to the providers of infrastructure andintegration responsibilities. The retained IT department applications services, particularly when cost reduction isshould be clear and consistent in empowering SIAM as its the client’s top priority. In such instances, the role of aagent. service integrator and the evolving role of the retained ITOne of SIAM’s roles is to provide the governance of department in the move toward a multisourced modelservices against the standards and policies set by the can easily be overlooked. What then typically results isclient. Where such standards and policies are ambiguous, an operating model with gaps, overlaps, lack of (orcontradictory or incomplete, governance becomes inappropriate) accountability, limited demandchallenging. management and benefit leakage.While IT service management has been in place for some As discussed, integration and governance functions aretime, a stand-alone SIAM function is a relatively new essential to maximize the benefits of outsourcing. In aconstruct. Numerous providers offer service well-coordinated sourcing transformation, the end-to-management services, although not all offer the full suite end IT operating model is considered beforeof SIAM services this paper describes. Many providers commencing the sourcing journey. Specifically, thealso have mature service management tool sets that control functions of the retained IT department arehave evolved from performing service management established early, setting the policies and standards foracross the separate divisions within their organizations; providers to deliver against. Implementation of the SIAMhowever, this tooling is often embedded in the delivery function is prioritized to ensure the organization is readyof their own services rather than managing service to effectively manage the other providers as theydelivery across different suppliers, which presents implement standard services and utility charging.challenges when attempting to automate the integratedprocesses across service providers.COMPLETING THE JIGSAW ■ HANNAH PATTERSON 5
  7. 7. KEY SUCCESS FACTORS 2. A robust program and project structure, including:1. A consistent, shared vision, including: A clearly defined target with key deliverables and A target operating model that considers the acceptance criteria set at the start, including the impact across all parties, embodied by: documentation of and widespread adherence to SIAM processes ‒ Consistent cross-provider service Appropriately skilled and incentivized joint teams management processes made up of individuals from all parties, including ‒ Contracts and service levels with each project and program management skills, SIAM provider that support the role of SIAM and process experts, business representatives and cooperative working practices across operational leads with accountability for the providers future state processes ‒ Effective governance forums, processes and 3. A continuous service improvement culture, controls that enable the client to manage characterized by: risk, exercise appropriate control and provide direction to the providers A delivery approach based on the evolution of ‒ A business change lifecycle which ensures existing service management processes and the the early consideration of how a new service delivery of early benefits, and perpetuation of integrates with existing services benefits beyond the initial establishment of the SIAM function A consistent understanding of the roles of the parties through communication and education . The empowerment of SIAM by the client, with a zero-tolerance policy to non-adherance to the model and processes, ensuring that service providers interface with, and support SIAM appropriately Buy-in from the businesses through education on the benefits and their engagement throughout the life cycleCOMPLETING THE JIGSAW ■ HANNAH PATTERSON 6
  8. 8. LOOKING FOR A STRATEGIC PARTNER? FURTHER READING For further information on the benefits achievable through standardized services, see the ISG white paper A Clean Slate: Standard Delivery of IT Services Drives Significant Benefits. Nigel Hughes and Steve Tuppen. For greater insight into the challenges of implementing a successful SIAM function, see the ISG report Are You Ready for the Service Management & Governance Challenges Ahead? Andrea Spiegelhoff and Denise Colgan. Hannah Patterson is a Principal Consultant with ISG. Contact Hannah at or +44 (0)1483 514500. To learn more about SIAM or to obtain help with your operating model for SIAM, please contact the Organization & Operations team leader in your region: - EMEA: Christopher Spackman at or +44 7712 078455 - Americas: Dianne Smock at or +1 248 227 8304 - Asia Pacific: Arno Franz at or +61 412 097 684 - Globally: Andrea Spiegelhoff at or +49 172 2371028Information Services Group Information Services Group (ISG) (NASDAQ: III) is a leading technology insights, marketintelligence and advisory services company, serving more than 500 clients around the world to help them achieve operationalexcellence. ISG supports private and public sector organizations to transform and optimize their operational environmentsthrough research, benchmarking, consulting and managed services, with a focus on information technology, business processtransformation, program management services and enterprise resource planning. Clients look to ISG for unique insights andinnovative solutions for leveraging technology, the deepest data source in the industry, and more than five decades ofexperience of global leadership in information and advisory services. Based in Stamford, Conn., the company has more than700 employees and operates in 21 countries. For additional information, visit 013012 © Copyright 2012 Information Services Group – All Rights Reserved