Service Integration: Own it or Outsource it? (A Perspective from London)

Outsource In-House Signboards

Chris Lawn, Director

Service Integration and Management (SIAM) refers to the framework or service wrap that converts a bunch of discrete technology-based “towers” from various suppliers into a set of seamless, business user-oriented, end-to-end services.

Getting SIAM right is imperative in today’s increasingly multi-sourced world. While bringing together a disparate team of specialized providers can certainly yield benefits, successfully orchestrating multiple services from multiple vendors presents a daunting challenge.

One key consideration is how SIAM services – that is, the specific function of managing the multi-vendor service delivery environment – are best delivered.

The two logical extremes for SIAM delivery can be characterized as “provide it in house” on the one hand, and, on the other, to “outsource it.”

Which approach is better? I moderated a debate on this question at a recent event at the Ritz in London, in conjunction with Alsbridge’s expansion in the European market. To summarize:

The case for in-house multi-supplier governance: Customers are best qualified to understand business requirements and direct this understanding to encourage appropriate competition and innovation from providers. Further, customers benefit from building and retaining critical skills and competencies and keeping them in-house. And, since multi-source new governance models are just a natural development of the roles of the existing procurement and contract management teams, it makes sense to retain that function. Ultimately, if the contracts for the various providers on the team include clauses to mandate cooperation, end-to-end services and joint innovation, then the client only needs to add a management layer to ensure that the suppliers deliver on the their obligations.

The case for third-party multi-supplier governance: Managing a multi-vendor environment is highly complex and specialized work that requires a team with skills and experience that many customers can’t attract and retain. Specifically, third-party suppliers will have already invested in the tools and the offshore back office capabilities necessary to implement cost-effective and reliable governance. Also, given the potentially contentious nature of inter-supplier relations, the governance team must be able to navigate the operational and commercial sensitivities surrounding IP sharing, knowledge transfer and joint ownership of end-to-end SLAs. Finally, an objective and independent third party can play a critical intermediary role to encourage collaboration and mediate when client/supplier conflicts occur.

So, on the face of things, both approaches appear to have merit. So which is better? The answer – as anyone who has ever worked with consultants can guess – is that It Depends….

Specifically, it depends on the nature of the multi-sourced model, and on the maturity level and existing organizational structure of the client organization.

For example, at the London event, executives from large organizations with significant outsourcing experience said they tend to focus on an in-house approach to managing SIAM, since their scale and expertise equip them to field the required numbers of staff with specialized skills. That said, outsourcing part of the SIAM function is frequently a consideration: over half of these executives said they were contemplating the use of a strategic partner to support their SIAM environment, but were unlikely to fully outsource this function.

In contrast, several attendees representing smaller companies from the retail and logistics sectors had either not yet considered SIAM opportunities, or had experienced serious problems during implementation. The consensus here was that specialist advice is needed to support SIAM implementation, and that a SIAM outsourcing partner should be considered by smaller or less mature companies taking their first foray into outsourcing.

In a nutshell, then, there’s no single answer to the question of how best to manage SIAM. But given the prevalence of multi-vendor operating models, it’s increasingly imperative that the question be asked.

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