EUROPA OJ THE OUTSOURCING JOURNAL. Outsourcing - division of labour gives competitive edge by Deutsche Bank Research

Transcription

1 Q2/ Deutsch / English OJ THE OUTSOURCING JOURNAL EUROPA Outsourcing von IT-Services und Geschäftsprozessen in Europa - Ein unabhängiges Informationsangebot für Deutschland, Österreich und die Schweiz. Auf mehr als 90 Seiten Wissen, Hintergründe und Kontakte, inklusive der Themen: Outsourcing - division of labour gives competitive edge by Deutsche Bank Research Structural quality metrics in SLA s by Jay Sappidi, CAST Research Labs Service integration & management in multisourcing by ISG (TPI) Weitere Beiträge: Germany - Lucrative sourcing market; Bulgarien; Polen; Corporate & competition law in outsourcing; Rumänien; Innovation in Outsourcing; Cloud im Mittelstand; Stop shouting - Marketing and Communication; Belarus; BPM & BPO, Ausschreibungsverfahren und mehr Deutscher Outsourcing Verband e.v. - Deutsches Outsourcing Journal Alle Rechte vorbehalten. Vervielfältigung oder Verteilung ohne vorherige Zustimmung untersagt

2 Assembling the Jigsaw - Service Integration and Management in a Multisourced IT Operating Model By Hannah Patterson, Principal Consultant, ISG (previously TPI and Compass Management Consulting) Recent developments in utilitybased 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. Page 25

3 The need for service integration Multisourced IT operating models are increasingly common and offer many potential benefits. Single-sourced models provide little flexibility in addressing rapidly changing business objectives. Multisourcing allows a client to move from indispensible single providers to take advantage of competitive provider behaviors that drive down costs and incentivize deployment of innovative industry developments such as cloud services. In multisource arrangements clients can select a best of breed provider for each of their bundles of IT services. Introducing numerous providers into an operating model also introduces challenges, as individual teams (both in-house and outsourced) can act autonomously and lack coordination across the enterprise. The resulting fragmentation of service delivery complicates the task of integration and governance, which is essential to delivering effective services. Issues can fall into the gaps between providers, leading to finger-pointing behavior and poor overall performance. Service restoration times can suffer while providers determine which component service is down and who is responsible. During problem analysis, service providers can focus on attributing blame rather than identifying the root cause. Lacking incentives to collaborate, service providers can become focused on competition to the detriment of providing services to the client. Governance must address both the supply and demand of IT services. Highly disparate IT requirements create complex and heterogeneous IT estates with poor value for money. Meanwhile CIOs today face increasing pressure to demonstrate cost efficiency. Cost savings realized through standardization of IT estates are therefore at risk if demand for nonstandard services is not managed. That said; legitimate busi- Businesses forecast their demand requirements SIAM aggregates demand from separate businesses within the organization, assisting the client with prioritization SIAM disseminates the information to the service providers Service providers translate the business demand into resource requirements and produce capacity plans to address the demand SIAM assures the plans and communicates the end-to-end consolidated enterprise capacity plan to the client Figure1: An example of IT-service management across the operating model Page 26

4 ness requirements for specialized services must be provided efficiently by the component providers in a multisourced operating model. The role of SIAM One possible solution to meet this need for service integration involves the creation of a Service Integration and Management (SIAM) function. The SIAM function specifies the service management processes and procedures to be deployed across the enterprise and ensures they are followed. It ensures multiple service providers (internal and/ or external) deliver services to multiple businesses in a cohesive and efficient manner. An effective SIAM can maximize the performance of end-to-end IT services to the business in the most costeffective manner. ITIL V3 provides a strong basis for implementing SIAM, as it covers the complete lifecycle of services and is recognized by most IT suppliers. Because ITIL is not prescriptive in its application, a service management structure such as SIAM is needed to translate the ITIL framework into working practices with clear bounds of responsibility. Effective service management requires the governance and control mechanisms and the roles and responsibilities of all parties to be clearly defined and unambiguous. Common IT service management processes and supporting tooling should be in place, which all providers (internal and external) and consuming businesses should interface with. SIAM acts as the central point of control between demand and supply. Figure 1 demonstrates, using Demand and Capacity Management as an example, how IT Service Management (ITSM) is in place across the enterprise, under the control of SIAM. SIAM performs a similar coordination and governance role for all SIAM processes. Further examples include the delivery of new crosssupplier services, the resolution of incidents affecting services across multiple service providers and coordinated disaster recovery. Symptoms of ineffective SIAM function The symptoms of an ineffective SIAM function are numerous and varied and may 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) and irrelevant SLA reporting with a failure to meet required business outcomes Poor coordination between providers for incident resolution and disaster recovery 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, resulting in heterogeneous estates and limited cost effectiveness Complicated procurement processes and extended delivery timescales SIAM success factors Key success factors of effective service integration and management are similarly varied. An effective SIAM provider should demonstrate mature service management processes and capabilities and alignment to the client s service management standards, such as ITIL. The integrator should be accredited to ISO Their service management toolsets should have clearly articulated interface definitions for other service providers to integrate their tooling into (note that the interface should be defined rather than prescribing the other provider s tooling which would increase constraints and costs for those providers). The integrated toolsets will support information flow between SIAM and the other service providers e.g. availability alerts, incident tickets, change requests and management information relating to consumption of services. Objectivity is essential. The integrator should act as the agent of the client, providing services in- Page 27

5 dependently from the other service providers. Independence can be achieved by selecting a different provider for SIAM services to those of other service towers or through the establishment of Chinese walls between the teams of a provider delivering both. The integrator should demonstrate a good understanding of the businesses supported. Success of an outsourced SIAM function is heavily dependent on the retained organization which needs to enforce adherence to SIAM s processes and empower the SIAM provider in their management of the other providers. Retaining accountability and control Clients who move to an outsourced multi-supplier model often wish to retain the SIAM function due to a fear of losing control. Where the client s IT department retains key controls and decision rights, that fear is unfounded. The client s IT department will always remain accountable to the business for providing the required IT services. The client s IT department should retain the role of setting policies and standards, e.g. for Security, Enterprise Architecture and Service Design. Business relationship management can be enabled by outsourcers but ultimately sits with the retained function. They will also own overall risk management and make decisions based on acceptable risk exposure for the client. They will own and manage the contracts with the Providers, making decisions such as when Service Credits will apply, invoices are paid or Exit is invoked. They must act in an assurance role above SIAM ensuring that the SIAM provider is delivering the contracted SIAM services and provide the point of escalation for SIAM, where SIAM is unable to resolve issues or disputes directly with the other providers. The SIAM function therefore acts as the client s agent whilst the client retains control and accountability. Alternative models The Service Integration challenge is common to almost all organizations and can be wider than just IT. Given the investment required to design and build SIAM processes and toolsets; leveraging the previous work of outsourcers often makes sense. However, implementation of an outsourced SIAM function is one of several potential models to address service integration. For example, Service integration is built-in to single or prime supplier models. Organizations with mature retained functions and significant supplier management expertise may be better suited to perform more elements of Service Integration in-house, potentially with some resource augmentation. For some organizations service integration is a key differentiator over competitors and is core to their success as a business; these organizations are choosing to not only retain, but to specialize in service integration. Given the numerous Service Integration options ISG recommends an assessment of a client s business drivers, maturity and capability in order to determine the model which best fits their organization. The author: Hannah Patterson, BSc Ms. Patterson is a leading expert in IT service delivery and specialist in Service Management and Integration (SIAM) in multi-sourced IT operating models. Over the last 7 years she has guided clients from various industry sectors through the lifecycle of defining and implementing IT sourcing transformations, including the design of operating models, construction of change plans and contract negotiation. In particular she is known for architecting and successfully delivering standard service solutions resulting in significantly reduced operating costs and improved service quality. Contact: Hannah.patterson@isg-one.com Page 28