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Outsource magazine: thought-leadership and outsourcing strategy | July 25, 2017

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Is SIAM the nirvana it promises to be?

Is SIAM the nirvana it promises to be?
Outsource Magazine

Service Integration and Management (SIAM) has been around as a philosophy now for a good few years, but is it the way forward for organisations to move in outsourcing their IT?

Back in the late 1990s and early 2000s organisations around the globe, both large and small, outsourced services with almost gay abandon (or so it seemed). Large single-supplier, multi-year (10+) deals seemed the order of the day. What could go wrong? Hand over the running of the non-core services, with IT being a prime candidate, to large global specialists and watch the cost base reduce before your eyes. Well that was what was promised, but, as we all know, in many cases reality proved a more bitter pill to swallow.

So in the late 2000s SIAM was born. This initiated the move into a structured multi-vendor environment, allowing companies to select in the best-of-breed suppliers for each service tower, rather than having to live with whatever standard deal your chosen outsource partner had struck. In addition, contracting with several providers for the same service, e.g. Applications Development, under framework deals would keep an element of competition during the term, which would surely keep price rises in check during the term of the contract!

So is SIAM this nirvana? Has it delivered, or can it deliver, the long-term benefits to the end user?

Richard Whitaker graphic full

As the model was conceived, the SIAM function would potentially be an outsource provider, either one of the service tower providers or a separate organisation, but over time more and more organisations have retained this element of the model. The impact of this decision is to transfer the responsibility for the success of overall service provision back to the client. This shift in ownership must surely bring into question whether organisations should look to go one step further down the disaggregation scale and move to a commodity-based IT solution.

So why should organisations continue to consider SIAM when looking to transform their IT?
The SIAM model, when implemented as originally intended, should provide organisations with that “halfway house”, where companies are able to select vendors they see as combining the best of breed in terms of price, skills and cultural fit, for a subset of the overall service provision, whilst retaining an element control  which was lost through full service outsource.

Additional benefits of the SIAM model are that it should be easier to conduct benchmarking exercises, as vendors have less opportunity to massage their service costs across multiple service tower offerings. Also, future transition to new tower providers should be less painful, as it should be a complete swap-out of one vendor for another on a single service.

So what are the risks?

Whilst at the outset vendors may appear to be accommodating when the ”C” word (collaboration) is mentioned, we are yet to see the enforceability of Operational Level Agreements (OLAs) when things start to go wrong. One thing we can be sure of is that the only winners when we do find out will be the lawyers.

In order to incentivise vendors into playing nicely together for the benefit of the client, many contracts are now including collaboration pots where suppliers put “at risk” a percentage of their fees against a set of cross-vendor collaboration objectives. If these objectives are met then the vendor retains their at-risk pot. If the vendor is deemed to have gone above and beyond in terms of collaboration they may also have the opportunity to earn a collaboration bonus. All sounds nice in theory, but, like service credits, suppliers become adept at providing a service which means they don’t lose revenue, and unless the bonus pot is sufficiently large it seems unlikely that this will prove enticing enough to tempt them into over delivering.

Finally, whilst the concept of SIAM allows for multiple vendors providing services within the same tower, and organisations of contracting on this basis, what they’re failing to take into account is the lack of maturity within their own organisations which is required in order to manage this type of vendor environment. Companies who have for years been within a single outsource provider model are unlikely to process the necessary skillsets within their retained teams to manage within a multi-tower setting, even without laying on the additional complexity of multiple vendors within a tower.

SIAM can work, but companies should tread carefully when adopting it to ensure that they learn to walk within the new world rather than sprinting headlong into a disaster waiting to happen.

About the Author

Richard Whitaker (2)Richard Whitaker has 20+ years of IT Procurement & Supplier Management experience, gained across many different industry sectors, ranging from utilities, retail and manufacturing. For the past five years he has been running his own niche consultancy, Blagreaves Consultants Ltd, specialising in services with clients across many industry sectors from financial services to international market research agencies. Richard has led many outsourcing negotiations across both conventional single supplier and multi-vendor models. He is currently working with Royal Mail as part of the programme transforming their IT operations into a SIAM outsource service.

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