Outsourcing Siam: Don’t Put Someone Else in the Driving Seat!

Public awareness of Service Integration and Management (SIAM) has grown in recent years. Many organisations now outsource this important function, despite the potential problems with outsourcing the management of your IT outsourcers. In many cases this emerging trend caused real challenges for organisations. Ben Barry, director of Coeus Consulting, explains more.

What is SIAM?

Most large organisations operate in an environment that requires many different IT services. Some of these requirements are handled by different suppliers, whilst others are controlled in-house. SIAM is the core function which coordinates these suppliers across multiple towers, internal or external, to ensure the effective operation of service delivery to a given business. SIAM is integral to such organisations because supplier integration is a real challenge without appropriate governance and management: the parts need to be coordinated for the smooth and efficient running of the whole.

Why outsource SIAM?

Ben Barry

The awareness and presence of SIAM has evolved greatly in recent years. Once faced with the challenge of managing a small number of large suppliers, the SIAM function now has to manage a larger number of smaller suppliers.

The first generation of outsource contracts were based on a sole-source model, whereby a single vendor provided all of the services. A lack of flexibility, poor performance by vendors, downward pressure on IT budgets and the need for specialist services has led to second generation outsourcing, which is based on a multi-sourced model.

A multisource operating model has its own challenges due to the need to govern, manage and coordinate activities across multiple internal and external functions. It can lead to gaps and overlaps between the functions. These can increase, not decrease, timescales and costs of the end services.

This creates the need to manage and integrate multiple functions and suppliers across the service environment.

Many sizeable UK companies, global organisations and government departments now implement dedicated functions to manage multiple vendors in a multi-sourced environment. In fact, the UK market is more mature compared to the rest of Europe when it comes to multi-sourced IT outsourcing. Very few contracts are single-sourced today.

The complexities of managing a multi-source environment has led many organisations to package-up the SIAM function and outsource it to a third party, which initially may seem logical. Having said this, what is logical and what works in practice are not always the same.

Outsourcing SIAM: the problems

Organisations now understand the need to create a well-defined SIAM function. However, the outsourcing of SIAM is fraught with challenges and few organisations have yet to make it work successfully. Indeed, problems such as poorly managed suppliers have led some organisations to bring selected services back in-house.

The biggest challenge that organisations encounter when outsourcing SIAM is managing crisis response. This problem arises when an IT issue directly affects business operations. An outside supplier will never have as great an investment in an organisation as their client. It follows that the supplier will rarely deal with problems as urgently as their client would. In any case, an outsourced supplier will rarely have sufficient authority to manage other suppliers and deliver a quick resolution when a major incident involves multiple other suppliers.

Loss of control is another key problem. A business will always want its IT organisation to remain accountable for service delivery. However, if SIAM is outsourced then one of their main levers to drive performance is out of the organisation’s direct control.

Outsourcing providers who deliver SIAM services typically have established processes and tool sets structured around delivering their own services, not managing a client and their vendors.

As a rule of thumb, the outsourced SIAM provider does not have the necessary authority to deal with budgeting and financial management processes. This presents another problem as the client’s finance function will be inundated with incomprehensible invoices, leading to an imprecise and slow budgeting process.

Ultimately, the business becomes frustrated and forges direct relationships with the vendors. As a result, the IT organisation has limited knowledge of requests or services being provided.

Is there a solution?

In determining the right approach for your organisation, many factors need to be considered. The right route is not always straightforward and must be adapted to the individual business. Whilst there are different approaches to sourcing your service management function, each has its strengths and weaknesses.

Consequently, as with any outsourcing project, SIAM should be approached with care. Businesses should only consider doing it in specific circumstances. For some organisations, this function is too critical to be effectively handled by a third party.

In light of the findings of our white paper, I would advise those businesses that have outsourced SIAM already and are struggling to make it work to explore the option of bringing it back in house.

Ben Barry is director of Coeus Consulting (www.coeusconsulting.co.uk) – an independent IT advisory and consultancy. Barry has 15 years’ experience designing IT operating models for large organisations.

A free white paper discussing this further is available from

http://www.coeusconsulting.co.uk/service-integration-and-management.asp