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

ASSEMBLING THE JIGSAW
Service Integration and Management in a Multisourced IT
Operating Model

Hannah Patterson, Principal Consultant, ISG

www.isg-one.com

INTRODUCTION

Recent developments in utility-based IT contracts, standardized services and
cloud computing are driving considerable savings out of IT budgets. ISG
analyses of large global organizations have identified potential savings
exceeding 40 percent. Additional benefits include the ability to address
specialized needs of different business models and to integrate best-of-breed
providers. However, to sustain these benefits, strong operational and
commercial governance processes are essential. Indeed, the benefits
achieved through leveraging a service provider’s standard service offerings
can be rapidly undone without effective controls in place.

In multisourced IT operating models, where technology services are provided
by myriad teams or organizations, ensuring seamless delivery presents a
challenge. One way to address this challenge is through contracting for 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.

This ISG white paper discusses the challenges and key success factors related
to service integration and governance functions within multisourced IT
operating models.

COMPLETING THE JIGSAW ■ HANNAH PATTERSON 1

THE NEED FOR SIAM THE ROLE OF SIAM
Multisourced IT operating models are increasingly A service integration function specifies the service
common and offer many potential benefits. Single- management processes and procedures to be deployed
sourced 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/ or
allows a client to move from “indispensible” single external) deliver services to multiple businesses in a
service providers to take advantage of competitive cohesive and efficient manner. An effective SIAM
service provider behaviors that drive down costs and function maximizes the performance of end-to-end IT
incentivize service providers to leverage innovative services to the business in the most cost-effective
industry developments such as cloud and standard manner.
services. In multisource arrangements, moreover, clients
ITIL V3 provides a strong framework for implementing
can select “best of breed” service providers for bundles
SIAM, as it covers the complete lifecycle of services and
of IT service based on each service provider’s individual
is recognized by most IT suppliers. Because ITIL is not
strengths.
prescriptive in its application, a service management
A multisourced operating model also presents some structure such as SIAM is needed to translate the ITIL
challenges, as individual teams (both in-house and framework into working practices with clear bounds of
outsourced) can act autonomously and can lack responsibility.
coordination across the enterprise. The resulting
Due to the similarity in scope, some executives
fragmentation of service delivery complicates the task of
mistakenly equate an ITIL implementation with the
integration and governance, which is essential to
establishment of a SIAM equivalent. However, effective
delivering effective IT services.
service management requires all roles and
One risk of governing and integrating services from responsibilities of the parties involved across the IT
multiple insourced and outsourced suppliers is that operating model and the associated governance and
issues fall into the gaps between service providers, control mechanisms to be clearly defined and
leading to finger-pointing behavior and poor overall unambiguous—something that ITIL alone does not
performance. Service restoration times can suffer as achieve. IT service management processes should be in
service providers determine which service is down and place across all organizations involved in the IT operating
who is responsible. During problem analysis, service model, with SIAM in the center coordinating the
providers can focus on attributing blame rather than enterprise.
identifying the root cause. Without effective governance,
The cross-enterprise process ownership, responsibility
policies and standards often are ignored or inconsistently
and accountability that SIAM enables are essential. Lack
applied across the IT estate. Lacking incentives to
of clear ownership can lead teams to use process rules
collaborate, service providers can become focused on
and guidelines to pass tasks on to each other without
competition to the detriment of providing services to the
understanding the overall risk to the business. The result
client.
is a “hot potato” culture, where everyone does his or her
Governance must address both the supply and demand job but the overall service fails to meet business
of IT services. Highly disparate IT requirements create expectations.
complex and heterogeneous IT estates and increase
SIAM acts as the central point of control between
demand for IT resources. In this time of austerity,
demand and supply. For Demand and Capacity
meanwhile, CIOs face increasing pressure to
Management, as an example, Figure 1 demonstrates how
demonstrate cost efficiency. Limited control over
IT Service Management (ITSM) is in place across the
demand, however, means limited control over the total
enterprise, under the control of SIAM. SIAM’s service
cost of IT. Cost savings realized through standardization
management structure similarly coordinates roles across
of 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 services
must be provided efficiently by the component providers
in a multisourced operating model.


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 model

SIAM’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 disaster
recovery.
SIAM acts as the gatekeeper to enterprisewide 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 enterprisewide, federated configuration management database
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.

SYMPTOMS OF AN INEFFECTIVE SIAM FUNCTION
The 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 silos


SIAM SUCCESS FACTORS contracts and acting in an assurance role above SIAM and
all service providers. As such, the SIAM function acts as
Key success factors of effective service integration and the client’s agent.
management 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 be
standards, such as ITIL. The integrator should be
applied to the estate
accredited to ISO 20000 and assured by the client’s
retained organization. ‒ SIAM defines the service management
processes and procedures in accordance
Objectivity 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 services
from 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 aligned
organization 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 and
delivering both SIAM and operations or development. To
maintaining the contractual relationships with all
effectively act as the client’s agent, the integrator should
service providers
demonstrate a good understanding of the businesses
supported and be able to provide an integrated set of Managing the service provider relationship at an
tools that allow the service providers to feed information executive level and the payment of service
into SIAM and support common processes (e.g. providers’ invoices
availability alerts, incident tickets, change requests and ‒ SIAM performs the day-to-day supplier
management information relating to consumption of management activities.
service). Overall risk management and controls assurance
activities through a team that set the policies and
Clients should demand mature service management
standards and holds ultimate accountability for
processes from their SIAM provider; these processes will
deciding whether solutions are to be accredited
be enabled by service management tool sets and ready
(e.g. security accreditation and compliance)
for other service providers to integrate their service
management tool sets into. Overseeing enterprise architecture that defines
the business, data, application and, at the
The 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 and
without dictating how they deliver services. A client who deliver their services
has a mature retained function, with significant supplier Managing service performance , e.g., by making
management expertise, has no real need to outsource decisions about service improvement plans or
the SIAM function, while a client with immature service
the implementation of service credits
management processes may want to outsource. Given
the 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 performance
outsourcers often makes sense. Managing business relationships responsible for:
‒ Understanding the priorities of the
organization
RETAINING ACCOUNTABILITY AND CONTROL
‒ Advising the client’s composite businesses on
Clients who move to an outsourced model often wish to how to drive benefits out of IT services and
retain the SIAM function due to a fear of losing control. contracts
Where the client’s IT department retains key controls ‒ Defining business services (made up of
and decision rights, that fear is unfounded. The client’s IT technology services) to be made available via
department always will remain accountable to the the catalogue
business for providing the required IT services. Where
SIAM is outsourced, the IT department should retain the
role of setting policies and standards, making decisions
(and setting the rules for rule-based decisions), owning


SIAM IMPLEMENTATION CHALLENGES We have seen a dual approach taken in the provision and
Although the SIAM function is essential in the operating development of SIAM services, where the existing service
model of many organizations, most SIAM perpetuates while the new service is developed in
implementations encounter significant challenges. parallel, switching over to the new SIAM at a single point
Indeed, previous ISG research found that SIAM functions in time. With this approach the client will not receive any
rarely 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’s
improved over time. ability to deliver.

One challenge is that the role of SIAM often is Where the implementation of the service integration
misunderstood, leading to mismatched expectations function is performed by a project team and the live
among the client, the SIAM provider and the other services organization has no accountability for on-time
service 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 with
of tasks, the momentum required for successful and implementing SIAM can lack the project and program
timely delivery is lost. management expertise to drive delivery against an
agreed plan, again causing delays. If the retained
In some instances an organization will appoint a SIAM organization, business and other providers are not
provider contractually but then fail to empower the engaged early in the implementation of SIAM, delays can
provider as the agent, allowing for businesses and occur or the services implemented may not be truly
providers to bypass SIAM as the central control point integrated across the parties.
described in Figure 1. If the SIAM provider is unable to
perform that role, the organization loses confidence in
the SIAM function and increasingly bypasses SIAM; thus, WHERE TO START
the organization spirals away from its target operating Organizations that make the decision to outsource are
model. Contracts or agreements with other service often tempted to expedite the transition of service
providers must therefore include clearly defined service responsibility to the providers of infrastructure and
integration responsibilities. The retained IT department applications services, particularly when cost reduction is
should be clear and consistent in empowering SIAM as its the client’s top priority. In such instances, the role of a
agent. service integrator and the evolving role of the retained IT
One of SIAM’s roles is to provide the governance of department in the move toward a multisourced model
services against the standards and policies set by the can easily be overlooked. What then typically results is
client. Where such standards and policies are ambiguous, an operating model with gaps, overlaps, lack of (or
contradictory or incomplete, governance becomes inappropriate) accountability, limited demand
challenging. management and benefit leakage.

While IT service management has been in place for some As discussed, integration and governance functions are
time, a stand-alone SIAM function is a relatively new essential to maximize the benefits of outsourcing. In a
construct. 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 before
of SIAM services this paper describes. Many providers commencing the sourcing journey. Specifically, the
also have mature service management tool sets that control functions of the retained IT department are
have evolved from performing service management established early, setting the policies and standards for
across the separate divisions within their organizations; providers to deliver against. Implementation of the SIAM
however, this tooling is often embedded in the delivery function is prioritized to ensure the organization is ready
of their own services rather than managing service to effectively manage the other providers as they
delivery across different suppliers, which presents implement standard services and utility charging.
challenges when attempting to automate the integrated
processes across service providers.


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 cycle


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 hannah.patterson@isg-one.com 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 christopher.spackman@isg-one.com or +44 7712 078455
- Americas: Dianne Smock at dianne.smock@isg-one.com or +1 248 227 8304
- Asia Pacific: Arno Franz at arno.franz@isg-one.com or +61 412 097 684
- Globally: Andrea Spiegelhoff at andrea.spiegelhoff@isg-one.com or +49 172 2371028

Information Services Group Information Services Group (ISG) (NASDAQ: III) is a leading technology insights, market
intelligence and advisory services company, serving more than 500 clients around the world to help them achieve operational
excellence. ISG supports private and public sector organizations to transform and optimize their operational environments
through research, benchmarking, consulting and managed services, with a focus on information technology, business process
transformation, program management services and enterprise resource planning. Clients look to ISG for unique insights and
innovative solutions for leveraging technology, the deepest data source in the industry, and more than five decades of
experience of global leadership in information and advisory services. Based in Stamford, Conn., the company has more than
700 employees and operates in 21 countries. For additional information, visit http://www.isg-one.com/.

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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