Setting the Table for Many … Service Providers, That Is

The sourcing environment has become intensely complex with every type of operational service potentially being outsourced, shared sourced, or retained and squeezed in every direction to increase productivity and profit line contribution. And all of this is complicated by multiple providers who must somehow work effectively together.

Managing business requirements (demand) and service providers (supply) in an integrated fashion is one of the greatest management challenges facing today’s executives. Three common failings can easily trip up service integration: the lack of collaboration, planning and clarity. Without collaboration, an organization will focus on blame instead of resolution, see poor integration of tooling and information flow and get mired in inappropriate escalations. The lack of forward planning can result in a release prior to sufficient testing and capacity mismatches. Without clarity, there seems to be no “conductor” in the symphony. Finance may be overwhelmed with incomprehensible invoices from service providers, users may have numerous service desks to call, and procurement processes may be overly complex.

An effective service integration strategy should provide (at a minimum) standard service management processes and tooling, e.g. a consolidated component management data base (CMDB), and an integrated service continuity plan, in addition to guidance on SLA levels and structure. Elements of service integration are mature aggregation of service components and early planning (ITIL “Design Cycle”) for operational support, including invoice validation, a comprehensive business catalog and the translation to service providers.

Figuring out how to set up service integration is the first step. Here are the Top 5 models for assigning the role of service integrator:

1. Build integration into each contract.
In this model, service integration is included as part of a single service provider deal, as in the traditional “one throat to choke” relationship, thus shifting some risk to the provider. This model goes against the increasingly common “best of breed” approach, and as such, tends to inhibit competition and makes transparency of integration costs difficult.

2. Make one of your tower providers the “guardian.”
Often the role of service integrator in this model is associated with the provider of service desk services, as this service tower includes a high degree of impact to the users. This is the most common scenario, and while it may reduce cost and complexity, the “guardian” may face challenges in achieving cooperation with other providers.

3. Assign a service provider to be the sole “orchestrator.”
When the only function of service integrator is carried out by one of your providers, they are able to offer a certain independence that may prove to be healthy. However, this is viewed by some providers as a high-risk role who pull away from offering service integration as a stand-alone service.

4. Do it yourself. In this case, the client performs the role of service integrator in a self-service capacity. This model is generally suited for a more mature retained governance organization.  The client may find it easier to drive innovation or transformation from this position, but it does require a mature, experienced and highly skilled retained team with strong processes and tools.

5. Design a hybrid vehicle. The client takes the lead role but is supplemented by a third-party provider. This model became popular late in the last decade. This model can improve speed of implementation, with access to provider skills, tools, and ready processes, but, again, it requires a relatively mature retained organization and willingness to collaborate with the provider.

Underestimating the role of the retained organization is one of the most common mistakes clients make when implementing a new operating model, especially in a multi-provider environment.

By Fred Croxton, Director, ISG

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