These are complicated times for the CIO. Businesses demand ever-faster change and operate under tight cost constraints with the expectation of excellent service delivery. The sourcing landscape is fundamentally changing: the age of the single megadeal is over, and new sourcing opportunities through cloud and SaaS are being exploited, sometimes independently by business stakeholders who then expect the IT function to manage and integrate them. Finally, into the mix stumbles the new flavour of the month: the outsourced SIAM function (Service Integration And Management – or Service Integration, Assurance and Management depending on who you are talking to at the time). At this point, the long-suffering CIO may throw their hands up in the air, crying “not another silver bullet” – and rightly so: the noise in the marketplace on SIAM is loud and mostly out of tune, and no-one seems to be able to agree on exactly what an outsourced SIAM function is, how to build one or how to make it work. So let’s try to simplify things a bit by asking two questions:
- What exactly does an outsourced SIAM do that isn’t already being done by an existing IT function?
- Why does a SIAM function make managing the complexity of a multi-supplier environment easier?
SIAM: same as the old boss?
To answer the first question, it’s useful to look at what SIAM is sometimes considered to include:
1. it takes responsibility for or assures end-to-end service delivery;
2. it designs and manages end-to-end processes;
3. it looks after the relationships between suppliers and customer.
Some offerings in the market for SIAM services will add a few more in – for example, managing service consumption and financial cross-charging. But the more you consider the list, the more it looks like exactly what an IT function needs to do anyway.
So it’s clear that SIAM, rather than being a new silver bullet for IT’s ills, is simply a way of thinking about how IT will deliver the capability to manage end-to-end services in our increasingly complicated environment. It packages up some of those responsibilities in a convenient form to be delivered by a third party. This brings us to the second question: on what basis does a separate sourced SIAM help us address the multi-supplier challenge?
Making SIAM work: creating ecosystems
The first part of the answer is that it is not sufficient on its own. In fact, because it introduces yet another supplier and contract, it can make things worse. And that’s often because SIAM thinking only focusses on one dimension of service integration: making the processes work across the supplier chain. And this is indeed an essential SIAM outcome: it creates the moving parts of the service delivery engine, and someone needs to design and monitor how those moving parts work. But, it’s not sufficient on its own. To understand how SIAM can work effectively we need to consider suppliers as more than just cogs in a machine; we need to think of them as parts of an overall ecosystem.
In nature, ecosystems are governed by complex interactions between the environment, the behaviour of organisms and the effects of natural selection and physical laws. In service ecosystems, the environment is created by the service providers, contract terms, the scope of the services and by the end-to-end processes. Their effective operation is dependent on defining and managing how those elements interact. In effect, you need to provide the analogous mechanisms of natural selection and physical laws – and unlike natural ecosystems, you don’t have several thousand years to allow the ecosystem to develop. This is where a SIAM layer comes in.
To create supplier ecosystems, a SIAM capability must deliver three building blocks:
1.Define and enforce the ‘natural laws’ of the ecosystem. Collaboration is easier when you share the same understanding of the environment. Successful service integration relies on establishing the key standards across contract terms, process and targets, particularly the end-to-end services required, and communicating these clearly to all parties. It also needs a degree of pragmatism – few organisations start this journey from a green field, and you will need to integrate incumbent providers. For example, existing suppliers usually don’t have agreed service levels that are consistent with new end-to-end targets. One approach here is to gradually bring in consistent service levels over time, giving suppliers time to make the changes to their delivery processes and underlying systems without applying undue commercial pressure.
2.Identify the behaviours expected from all ecosystem participants. Most supplier contracts contain obligations for that supplier to cooperate with others; why then do many customers complain that their suppliers can’t appear to work together effectively, in spite of their investment in processes and tools? The lesson is that unless the participants behave in the right way, no amount of process definition or management can compensate. At the heart of this is defining exactly what you mean by ‘good’ behaviour: that obligation to cooperate needs to be broken down into specific, observable behaviour. So, a general requirement to work with other suppliers to manage change might be supported by several specific behaviour descriptions, for example “we involve the other partners in the planning of our downtime and work with them to adjust our plans and to mitigate the effects on service”.
3.Employ incentives that drive behaviours for both organisations and individuals. Why should people behave the way you want? Most formal contractual relationships are defined by what happens when things go wrong. These still need to be there, but to truly get alignment between how people on the ground behave and the goals of the ecosystem, you need to create the ‘pull’ of reward – both for the organisation and for the individual. Ultimately, successful SIAM needs to be able to recognise the contribution of the individual, and this goes beyond what can be easily enshrined in a contract. Finding out how your suppliers’ own recognition and reward systems work and exploring ways for you as a customer to feed into those processes is a good first step.
With the right ecosystem foundations, an organisation’s SIAM capability can deliver end-to-end service excellence by actively managing all the aspects of performance: rules, behaviours and incentives. In addition there needs to be recognition of the most important lesson that the customer organisation is not outside the ecosystem. It must be an integral part of the environment, being held to the same rules, behavioural standards and (at least) individual incentives.
So does SIAM represent salvation or yet more pain for the overburdened CIO? The answer has to be that it has a role to play, but only if the ecosystem essentials are built up and SIAM treated as a way of providing the critical capability you need to manage complexity, not simply an owner of processes.
Greg Jones is an expert in shared services and outsourcing at PA Consulting Group
To visit PA's pages on shared services and outsoucing, please click here.
This article was first published in Outsource Magazine.