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www.hcltech.com

Some Food for Thought:

Why AchievingMulti-ProviderService Harmony

Is No Trivial Task

Service Excellence Doesnt Care AboutService Complexity

Avoiding the Watermelon Eect

A Glimpse into the Gold Standard SIAM Function

Featured Gartner Research: Evaluate a Build,

Operate and Transfer Model to Establish

Your Own Multisourcing Services Integration Role

featuring research from

2

4

9

14

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Have you ever experienced a Michelin starred restaurant? As it happened, the other day at an important client dinner at a

very famous restaurant in London, I was thoroughly impressed by the swiftness, presentation, quality and sheer

seamlessness with which a great variety of food was delivered to a very heterogeneous group of people. At the end of it,

there wasnt one soul at the table who didnt leave without a smile on his or her face. It wasnt just dinner; it was an

experience.

Creating such an experience takes much more than talent and hard work. It takes clear lines of control, teamwork and most

of all, it involves the implementation of a very mature service management framework. Imagine a busy kitchen, buzzing

with a dozen chefs. Each specializes in a different kind of food--or even parts of the food preparation process--while

managing scores of orders in parallel. Now relate this back to the expectation of the customer sitting impatiently in the

restaurant, expecting a Michelin starred experience at the table, while oblivious to the complexity between the chefs, the

service staff and the various suppliers involved, you might realize that the art of cooking is just one part of the Foie Gras

you consume. In fact, cooking is a well-defined process framework with rules, a clear understanding of each service

owner's strengths and weaknesses, and a restaurant manager whose job it is to orchestrate all this into the desired

experience, delivered every time, and without any scope of error.

If you are in IT, or are a part of the business which depends on IT services, it will not be a stretch for you to realize that a

similar weight of customer expectations is on your product or service. Much like a customer at a famous restaurant, yourcustomer is oblivious to the hundreds of cog-wheels in your machine, each performing its own function to the highest

efficiency and quality. More importantly, each must be working in perfect harmony together to deliver the desired end

experience. For example, every time a shopper clicks the Buy Now button on your website, she expects that her coveted

purchase is delivered to her door as per the SLA she paid for. She doesnt care that that the delivery requires the

harmonious execution of 10 different processes and five different functions from IT to warehousing, supply chain and

finance. And if any of those processes or functions are outsourced, then we are looking at a multi-dimensional,

multi-service, multi-SLA management challenge that requires skills not too different from the manager at a Michelin

starred restaurant.

This is why SIAM (Service Integration and Management) has been consistently named as a top IT and business service

related challenge time and again in various reports and studies. One reason for SIAMs rise in importance is that high

performance organizations are heterogeneous at their core, consuming best of breed services from vendors they

painstakingly select and manage.

Service Excellence Doesn't Care about Service Complexity.

In simple terms Service

Integration and Management

(SIAM) is an approach to

managing multiple suppliers of

information technology servicesand integrating them to deliver a

unified business-facing IT

organization.

In this sense, "service management" refers to managing the service life cycle all the way from strategy to transition, and to

operation and improvement. The "service integration" piece is what binds together multiple service providers, streamlining

multiple processes and tools to deliver a cohesive service working as a single unit.

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ITIL (Information Technology Infrastructure Library) best practices

and guidelines form the basic foundation of any SIAM function. But

inherent to ITIL are certain limitations i.e. the guidelines only tell

you the principles and best practices for processes, but leave out thehow part. To be successful and effective, IT Service Management

(ITSM) needs more than ITIL; it needs an implementable framework

that expands ITIL guidelines to include others (such as COBIT and

CMM) to make ITSM practical in real-world scenarios. Implementable

ITSM also needs a strong technology platform, and the right skills

and partnerships to configure and manage the ITSM tools. Finally,

successful SIAM implementation, much like a Michelin restaurant,

needs an organization responsible for coordination, management,

end-to-end service reporting, driving innovation. This is known as

the "Service Management Office." In fact, today the prevalent trend is

to outsource the SIAM function to capable Service Integrators (SIs)

who bring with them implementable ITSM frameworks and therequired technology expertise to create, run and manage successful

SIAM implementations.

Achieving service excellence through multi-provider harmony isnt a

trivial task, as SIAM requires focused investment, execution and

control. It requires multiple individuals, parties and organizations to

be aligned to a single goal while doing what they do best, and in the

best possible way. It requires the focus to shift from the creation of

complexity to the consumption of simplicity. If this sounds like no

mean task, bringing a smile to a customer's face never is; just ask the

manager at any Michelin-starred restaurant.

The growing trend of organizations sourcing services from an

expanding number of suppliers is akin to a restaurant managing its

employees. As chefs, servers, cleaning crews, etc. have their individual

skillsets and ways of working, they jointly aim to provide to customers

the finest food and customer experience possible--as governed by the

restaurateur. Similarly, organizations may follow their own processes,

but still have to deliver discrete individual components (servers,

storage, network, etc.) to support and deliver an end to end service

based on an agreed SLA to achieve a common purpose.

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Avoiding the

Watermelon Effect.Are 100% of IT SLAs green, but your business still sees red?The solution could lie in implementing successful SIAM.

While SIAM is not a new concept, the current pace at which

the IT landscape is changing has brought it to the top of a

CIOs or business managers list of priorities. As businesses

depend more and more on IT delivering on, or even exceeding

the promise of technology, the demands placed on IT mandate

the leverage of best-of-breed suppliers. Similarly, Service

Management has evolved from a stage where the challenge

was integrating the retained organization and the single, large

supplier, to todays challenges of much higher magnitude that

require the integration and management of multiple vendorsand a complex mix of services.

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Bringing together multiple suppliers, each with their own style of working,

processes, tools, etc. and molding them into one cohesive service is not

a walk in the park.

Understanding the Challenges of Successfully

Implementing SIAM

Complex supplier to supplier accountabilities:

The services and the criticality of a supplier in the service value

chain decides the accountabilities and the roles. Since very clear

accountabilities between different suppliers is difficult to

achieve, especially in todays dynamic, complex and often-times

cloud based IT environment, this becomes one of the major

challenges while implementing SIAM.

Different SLAs mean different measuring tapes:

Contract terms and SLAs agreed with suppliers are more unique

than similar, rendering a one size fits all kind of service level

measurement unworkable. Complexities to be considered can

range from different incident priority matrices to something asbasic as different contracted hours and even currencies!

Difference in organizational culture of suppliers:

A business issue resulting from a complex service value-chain

needs to be resolved even if it is not within the scope of the

contract. This can, for some suppliers, mean getting into long

contract change discussions. Successful SIAM requires an open

collaborative culture where suppliers act responsibly and do all

they can to support the customer, even if it is something which

hasnt been specifically included within the contractual scope.

A few challenges that organizations facewhile implementing SIAM function are:

Data transfer issues between suppliers due to different tools and processes

being used

Reduced collaboration due to different physical locations, languages and time

zones

Differences in delivery models (some using shared staff, others a dedicated

team, etc.)

Different incentives to transform, improve and innovate

There can be several other challenges in implementing successfulSIAM, such as:

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Creating an Effective SIAM Function

The SIAM function, which is enabled through a combination of processes and tools, is executed by a human

workforce and usually assisted by automation. As we had seen through the example of the Michelin starred

restaurant, and the challenges enumerated in the previous section, creating a seamless multi-vendor

organization is easier said than done. But as scores of successful high-performing organizations can testify, it is

difficult but not impossible. We distilled the key elements of effective SIAM from more than twenty such

successful implementations to give the user a perspective of what it takes to build effective SIAM.

The key elements which need to be defined and implemented when building a SIAM function are:

Service Management Processes & Tools

The service management processes and tools deployed to enforce, support and enable the SIAM function form

the foundation of managing operations and integrating multiple suppliers to align them towards ONE singleprocess goal.

There can be three different use cases to consider while deciding on the SIAM processes and tools:

One common ITSM framework (tool + process):This is the most ideal scenario where the supplier and the

service integrators use the same ITSM tool and follow the same process guidelines, hence doing away with the

need to define additional ways of working together.

Supplier brings tools and process to the table:Alternately some suppliers may use their own ITSM tool and

processes. In this case, the proper workflows would need to be defined, agreed upon and implemented.Unfortunately, this is a common scenario and definitely not a preferred option as this would mean that all the

various ITSM tools being used in the SIAM environment would have to be integrated to talk to each other. This

in turn could require complex and laborious data transformation and consolidation to enable consistent and

understandable flow of information.

Swivel: This is commonly used when suppliers criticality in the service chain is low. Here, a manual swivel chair

approach integration is used (i.e. tickets can be keyed into two tools manually, and the ticket numbers entered

into the tools provide an end-to-end audit trail).

The discerning reader would have guessed by now that in reality, typical multi-supplier environments combinethe best of the above three scenarios where the kind of tools and processes being used depend upon the

criticality of the supplier in such an environment. This is a viable approach to SIAM, which ensures that

investments are directed towards the most critical services and su liers first.

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As in all complex undertakings, the devil lies in the details and this is where organizations fail to

notice the smaller cogs that make up for a well-oiled SIAM function. Details such as factors related to

the data important for each process, security and compliance, access and user profile management,

cost chargebacks, etc. can all impact the architecture and design of the SIAM function. Additionally,

the service management solution should be robust enough to be able to cater to these requirements.

While typical Configuration Management Databases (CMDB) provide a route map for service delivery

components (CIs) and their interrelationships, to understand the impact of these services on business

requires that this mapping is extended to the service and process layers. This helps cover additional

attributes to support the SIAM organization (eg the SLA, the criticality, the vendor supporting the CI,

their support hours, etc). These service maps form a critical component for implementation especially

if the SIAM function is being provided by an external supplier, as they may not have adequate

visibility or the understanding of the complexities and inter-dependencies of the prevalent

environment.

This is the organization that needs to be designed and put in place to run the SIAM function. Factors

such as scale and complexity of the services landscape, and the locations of the service providers and

the consumer of the services need to be considered while figuring out the SIAM organization. The

other important consideration is that of internal-external mix. Making smart decisions on how much

of the organization needs to be retained vs. what needs to be outsourced to capable SIs will

determine the eventual success and ramp-up speed of the SIAM function.

The truth of the matter is that suppliers are rarely contracted for business outcomes; instead their

SLAs only cover their area of responsibility as captured by their contracts. So who owns the SLA on

business outcome? This disconnect leads to fragmentation of responsibility, eventually leading to lack

of accountability for business performance. This can be changed by defining clear Operating Level

Agreements (OLAs) as a part of the ITSM implementation, and ensuring that internal and external

services providers are all aware of and align their SLAs to the overall OLAs. Here are a few other steps

you can take to ensure business accountability:

Capture inter-supplier dependencies very clearly in your OLAs while doing any ITIL implementation.

Incentivize good behavior and foster a culture of collaboration and innovation between suppliers.

Ensure that the ball is not dropped when an issue is handed over to another supplier for resolution

by including generic dependencies between suppliers in your contract.

Service Management Architecture

Service Maps

Functional Structure

Contract Structure

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By its very nature, SIAM is a very dynamic function with many players with multiple

inter-dependencies and lines of control. To ensure smooth operations and guaranteed business

performance, well-planned governance structures need to be put in place to manage and obliterate

potential loopholes. This can be done through forums such as :

Proactive issue resolution and operational reviews

End-to-end performance and compliance review of the suppliers

Steering committees which drive continuous innovation and improvement in the SIAM function

Governance

Source: Gartner: Use Effective Multisourcing OLAs to Deliver Integrated Services and Business

Outcomes

Published: 28 May 2014, Analyst(s): Jim Longwood, Gilbert van der Heiden, Will iam Maurer

Operating-Level Agreement

Business ContextService Integration

and Management

End-to-End Service

CommitmentsAnnexures and Schedules

Introduction Service Desk Coordination Technology Environmentand Standards Governance

OLA Purpose and ObjectivesService Operation

Management

Technology Environment

and Standards

OLA Change Management

and Implementation

Shared Values and Common

Operating Principles

Performance Management

and Reporting

End-to-End Service Levels

and OLOs

Common Operating Process

Documentation

Overarching Role of

MSI/SIAM provider

Service Knowledge

ManagementIncentive and Penalties

Toolsets and Messaging

protocols

up

Service Delivery

Reviews

Supplier Service

Managers

Operational Reviews

Suppliers

Process

Managers

SIAM MSI Suppliers

Conceptual Structure of Key Components in a Best-Practice OLA

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Design an effective operating model to foster a culture of collaboration,

innovation and success.

The industry now believes that creating a multi-source ecosystem with the

right mix of collaboration and competitive tension could help organizations

source services that its business needs, while effectively integrating and

evolving those services in lock-step with rapid business growth.

The simplified goal is to coordinate internal and external suppliers and the

services they deliver in an efficient, but cost-effective way. To achieve this,

however, the design of the overall SIAM function should drive a culture of

customer and the ecosystem first and supplier needs second. Does this

mean that if you are putting an agile, responsible and responsive service

ecosystem in place that you need to go back to the drawing board? With the

right framework and operating model you dont have to.

An operating model helps decipher and simplify the scope of the SIAM office

into components, towers and organizations, and depicts how the whole

eco-system works. It can help suppliers and the business stakeholders

understand the whole picture. Thus, the operating model provides a blueprint

for multiple domains including processes, people and technology used for

service management. The world's leading SIAM suppliers have established

operating models by combining ITIL with other prevalent service

management and compliance guidelines. One such example is the Gold

Standard SIAM Process Framework from HCL.

A Glimpse into the"Gold Standard"SIAM FunctionBest Practices from a SIAM Suppliers perspective, gleaned

from more than 100 successful implementations

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The processes and activities to be performed by the SIAM supplier can be fit into two broad stacks:

Service design, transition and operation processes (e.g. incident, change, release, etc.)

Contract and commercial management processes

There are varying views in the industry, and several organizations include the contract and commercial

management processes within the external suppliers scope as well. This is not unusual as invoice

management has traditionally been outsourced to BPOs.

However, depending on the operating model, it may be advisable for the contract and commercial

management processes to be retained by the customer or separated from the service operations part of

the SIAM organization, to ensure that:

If the SI supplier is also an organization providing one or more technology services, then they are not

managing their own invoices, service credits, penalties, etc. (akin to the fox guarding the hen house)

Since the SI partner may be competing with the other suppliers in the marketplace, if they are not

directly involved in the commercial management of the contract of the suppliers, this will help avoid

issues within the ecosystem and help support the culture of collaboration

There are several views in the industry as to what should form part of the SIAM suppliers scope. The SIAM

function should be designed not only as an enabler to functionally aggregate and coordinate component

services from discrete service providers to deliver a seamless end to end service, but also to foster a

culture of cooperation and collaboration within the ecosystem.

One of the key success factors for the model to succeed is neutrality. The SIAM supplier cannot be seen as

being partial or biased towards the resources/teams (if any) from their own organization providingservices in one of the towers. Another important aspect to consider is that the suppliers in the ecosystem,

may also be competing in the marketplace.

What to look for when evaluating a SIAM supplier?

Track Record in Multisourced

Environment

Ability to Integrate Operations

at First level Help Desk

Ability to Deliver and Manage

an End-to-End Service

Ability to integrate cloud

Service Brokerage Functions

Experienced in managing multiple

traditional and cloud Service

providers

Industrial-strength help desk

capable of supporting of

supporting an ecosystem ofproviders

End-to-end service delivery

quality including related end-to-

end performance reporting

Automated service brokerage and

orchestration functions.

Service management framework Supports multivendor service

portfolio/catalog.

Collaborative service

management of multipleproviders.

Toolsets for integration between

cloud management platforms andCSB aggregation tools.

Quality management framework Ability to establish, measure and

enforce OLA

Understanding of business

objectives.

Cross-platform integration toolkits

for laaS to aPaaS to SaaS layers,

for example.

Value-added governanceframeworks and OLA templates

NA Workable governanceframeworks.

Ability to Establish, measure andenforce extended OLA across IT

and Cloud Service.

OLA= Operational Level Agreement: MSI = Multisourcing Services Integrator: CSB = Cloud Services Brokerage. laaS= Integration as a Service;

aPaaS = Application Platform as a Service: N/A = Not Applicable

For further information on CSB integration see Manage Your cloud services With the right Roles and Technologies (G00238933) and What IT

leaders Need to Know About Cloud Services Integration: Proactively Address the Challenge (G00247426).

Source: Gartner (August 2013)

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A tried and tested operating model can expedite the establishment of an effective SIAM function, but not

until it is actually implemented through an IT Service Management Technology platform, such as

ServiceNow or BMC Remedy. On their own, these platforms do not bring any of the common ITSMprocesses to life, and configuring and programming them to accept different inputs and connect with a

variety of systems, building complex workflows and rule engines etc, can be time-consuming to the point

of being harmful to the overall SIAM establishment exercise. One solution could be to leverage

prepackaged distributables which can significantly expedite SIAM go-live. One such example of a

prepackaged SIAM solution is HCLs Gold Blueprint, which, as a ServiceNow image, can help organizations

launch the SIAM function in a short timeframe. In summary, effective SIAM is not a task. It requires

diligence, planning and focused execution across three towers: people (culture), process and technology.

And sometimes, choosing the right SIAM partner with experience across all three can mean the difference

between effective SIAM and a long, hard road that leads to eventual business dissatisfaction.

Depicted below is a sample SIAM operating model (process and tower view)

Below is a depiction of an Enterprise Service Integration Platform

Service Integration & Management

Customer Business Divisions

Business Unit 1 Business Unit 1 Business Unit 1

Commercial/ Contract

Mgmt.

Financial Management

Contract Management

Commercial Issue

Management

Supplier Risk and

Contractual

Compliance

Invoice Management

Performance penalties

and earn backs

Commercial

adjustments

Demand

DemandManagement

Service portfolio management

Service Catalogue Management

Service Level Management

Availability Management

CapacityManagement

IT Service ContinuityManagement

Information Security Management

Service Strategy & Design

Transition planning and Support

Change Management

Asset Management

Configuration Management

Release & Deployment Management

Service Validation and Testing

Knowledge Management

Service Transition

Event Management

Incident Management including Major

Incident Management

Request Fulfillment

Problem Management

Access Management

Service Operation

SupplyService Measurement and Reporting

Continual Service Improvement & Innovation

PartnerEco-System

Service Desk

Enterprise Operations Center (Monitoring)

AppsDevelopment&

Maintenancesuppliers

SIAM interface

End User Services

Supplier

EUS Device Mgmt

VDI and Citrix

S/W Configuration and

Distribution

Mobile Device Mgmt

Field Services

etc

SIAM interface

Managed Network

Services Supplier

WAW Services

LAN services

CommoNetwork

Services

etc

SIAM interface

Hosting Service

Supplier

Data Center Hosting

Physical Platform

Virtual Platforms

Mainframe

etc

OtherSupplier

AskAsk

Implied OLA matrix

Billing & Metering Payment Dynamic Service Store Reporting Service/ Asset View

Enterprise self service

Partner On Premise/

Cloud Services

ITSM Aggregation (HCL GBP)ESM Aggregation

(HCL Event Mgmt GBP)Asset & CI Aggregation

(HCL GBP)

Cloud Aggregation

(HCL My Cloud & My Workplace)

Interface withPMO, VMO,

EA

IT Business

Mgmt

Operational

Integration

Unified

Service Desk

& Command

Center

ServiceLifecycle

Mgmt

Service Mgmt

Office

SupplyDemand

Supplier C

ESM

Supplier A

ITSM ESM

CMDB

Supplier B

ITSM ESM

CMDB

Supplier D

ITSM ESM

CMDB

Role-based access

Service Provider Ecosystem

IaaS Offerings PaaS Services SaaS Services Virtualization Physical

Internal On Premise/

Cloud Services

External On Premise/

Cloud Services

ServiceCreation&

Publishing

Service Resell Service Intermediation Service Arbitrage Service Aggregation

Appstore/ Marketplace

Adjust

Listen&Create

Repeat

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ArcelorMittal Europe ,the worlds largest steel producer, with an IT portfolio

which comprises of Dozens of shared IT services and Hundreds of IT service

providers spread all over the globe lists Service Integration & Management as

a vital need for business.

Christophe Bauret, Head of Service Management, ArcelorMittal Europe - In the

current IT landscape, business functions do not necessarily rely on their IT

organization to provide computerized services and apps. Cloud and web-based

solutions and managed services are addressed by the business functions as

extensions of their IT organization. The advent of new services appearing and

sold as "ready to use," or "plug and play" have added to the confusion. Thus the

need for complex service integration has brought on a shift in everyone's

mindset, and is one of the key focus areas of the ArcelorMittal IT organization.

HCL is helping ArcelorMittal in this journey by providing a common Europe

Service Desk and a common set up ITIL process and tools based on their Gold

Blueprint and ServiceNow propositions.

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For more information please write tocontact.infra@hcl.com

with HCL

Multi-Provider Service Harmony

Experience

SIAM Gold Blueprint

BluePrint

SPONSORED AD

Is your IT prone to the watermelon effect?

Is your ITSM rollout suffering from the "are we there yet? syndrome?Are you discussing exceptions more than innovations with your service providers?

Are your SLA and CSAT results misaligned?

The HCL philosophy of systems integration revolves around enterprise architecture methodologies, application-centricity

and a vendor neutral approach, with a view to build a robust, business aligned and optimized IT environment for

customers. Leveraging ServiceNow, HCL SIAM Gold Blueprint can reduce complexity and time-to-value while protecting

your existing investments with a tried-and-true solution.

mailto:contact.infra@hcl.commailto:contact.infra@hcl.com

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Evaluate a Build, Operate andTransfer Model to Establish Your OwnMultisourcing Services Integration RoleInternal IT is at risk of being bypassed as external multisourcing services integrators and cloud ser-vice brokerage roles coalesce. We look at how sourcing executives can establish an internal MSI role

using a build-operate-transfer sourcing model to reduce multisourcing complexity risks.

Key Challenges

The ability of business units to buy cloud services directly and the looming coalescence of external

mutltisourcing service integrator (MSI) with cloud service brokerage (CSB) roles, threatens to sideline

internal IT organizations role to manage their key IT and cloud service providers.

IT organizations are struggling to improve their core multisourcing management capabilities and will

be challenged to manage their own unique hybrid cloud environments eectively as the Nexus of

Forces drives further changes.

Despite being a decade-old model, products related to MSI and service integration and management

(SIAM) maturity is still limited and often tower based.

The CSB role is a very recent and even less mature model, which cannot be bought o the shelf

from service providers, but as customizable oerings in the market.

Recommendations

Sourcing executives should:

Reduce the risk of IT being bypassed in using external MSI, SIAM or CSB providers, by assessing and

enhancing their current level of multisourcing management capability.

Clearly understand what MSI and CSB roles are about in terms of capabilities, processes, tools and

tasks and evaluate what investment is needed for implementation.

Evaluate all potential sourcing models for the MSI role, such as outsourced MSI or CSB roles vs. inter-

nal roles. Continually update their IT sourcing strategy and options for the MSI role in their business to

maximize value and control risk during the evolution of cloud services.Introduction

CEOs around the world (47%) declare that following a digital strategy involving the Nexus of Forces

(cloud, mobile and social and business intelligence) is driving an accelerated transformation toward

digital business models, cloud-based solutions and managed services.

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The twin challenges of enabling business growth by delivering new business solutions, balanced

with decreasing or stagnant budgets are of key importance to CIOs and require multiyear IT services

sourcing strategies to increase eciency and reduce costs in the back oce (run-the-business-fo-

cused IT and non-dierentiating processes, for example). At the same time, they need to invest inthe front oce transformation.

IT services sourcing managers not using a disciplined, ecient and exible sourcing management

approach can be overwhelmed by all-round pressure to: Continue to deliver value from sourcing through innovation, while being expected to reduce costs.

Sustain business trust through IT services sourcing alignment with business demand.

Eectively incorporate the Nexus of Forces into their sourcing strategies.

Manage an increasingly multisourced hybrid ecosystem (traditional IT and cloud services).

Gartner analysts receive a signicant amount of inquiries from sourcing and IT managers, CIOs andother executives and very often identify two common organizational issues:1

The lack of a clear, documented, business-aligned, fact-based and agreed sourcing strategy.

The lack of multisourcing management capabilities.

These problems are not new and are often intrinsically linked. Without an eective sourcing strategy

the role and capabilities for the internal vs. external component of the end-to-end IT services value

chain are not well dened and structured. Duties are often duplicated (see the Case Study section),

while clients frequently expect that providers will straddle multiple boundaries (across providers and

client processes) to solve all problems, even if not contracted to do so.

Conversely, IT organizations without mature and eective multisourcing management capabilities

are struggling to manage multiple providers unable to generate enough value from their currentdeals. These issues are compounded by the lack of key capabilities needed to design and implement

robust IT sourcing strategies to redress the balance.

This negative cycle of sub-optimal sourcing strategies, sub-optimal deals and limited investment in

building multisourcing management capabilities, launches IT organizations into emergency problem

management mode. The credibility of the IT/sourcing function is then reduced, which in turn drives

business units like marketing and other process owners to look outside for industrialized, cloud-

based IT services, further reducing the need for internal IT support.

This scenario has generated increased traction and interest in two similar models for managing theevolving ecosystem of traditional and cloud IT service providers:

The MSI sourcing model, treated in Gartner sourcing model research since the late nineties as a vari-

ant of the prime contractor model, then tracked in Hype Cycles as MSI and more recently, referred to

as SIAM.2

The CSB model, driven by the increased complexity of multiple types and layers of cloud services

available in the market.

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These two models have quite dierent degrees of maturity (MSI is close to the Trough of Disillusion-

ment, while CSB is mid-way toward the Peak of Expectations). Nevertheless the two models (one

from outsourcing and IT service sourcing research and the other from cloud services research) are

clearly converging in the market because:

Cloud services are more automated, industrialized versions of IT services and need to be managed

like any other form of service.

IT services sourcing strategies are becoming more complex, due to the digital revolution.

A hybrid combination of traditional IT services and Nexus of Forces-driven, cloud-based services is

likely to be the outcome of IT services sourcing strategies in this evolving and contemporary digital

environment.

The dierent CSB activities (integration, aggregation and customization) can be executed by external

service providers, but will ultimately need to be managed by the client.

The coalescence of the two roles (MSI and CSB) could pose a potential risk to internal IT organiza-

tions, as business buyers may bypass them altogether and purchase their IT services directly and

then use an external MSI/CSB provider to fully manage the IT services on behalf of the business unitsGartner has identied the management and integration of service providers as a core competency

for IT organizations in the future and other published Gartner research related to the Outsourcing

Competence initiative.

We recommend that sourcing executives and CIOs act on this signicant risk by considering and act-

ing on the recommendations in this analysis and using the best practices options in Figure 1 to im-

plement an internal MSI role. This analysis also covers some of the specic circumstances and drivers

to using a build-operate-transfer (BOT) sourcing model option for this role to strengthen key internal

sourcing competencies.

Evaluate the current level of multisourcing managementexperience and the risk of being bypassed byexternal brokers.

Evaluate all sourcing models for MSI, such asoutsourced vs. internal and reskill vs. external project,vs. a build-operate-transfer approach.

Identify the most appropriate IT sourcing strategy,including the right MSI sourcing option to maximize valueand control the risk of cloud evolution.

Three BestPractices for

Implementingyour ownMultisourcing

IntegrationRole

Figure 1. Three Best Practices for Implementing the MSI Role

Source: Gartner (August 2013)

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Analysis

Assess and Enhance the Current Level of Multisourcing ManagementCapability

Most client organizations struggle with the management of an ecosystem of multiple traditional IT

outsourced services along with hybrid cloud services the likely outcome of their IT sourcing strat-

egies. Each unique combination of technologies and sourcing decisions controlled by competing

business units will create multiple combinations of internally and externally delivered services to be

managed. This will include traditional and cloud-based delivery models, acquired and managed by

various groups from the IT organization, to a corporate shared service to individual business units

like marketing, human resources or nance and accounting (F&A).

The unique combination and hybrid environment created by each business unit will also require a

unique combination of MSI and CSB capabilities, along with a specic implementation of tools and

processes. Therefore, Gartner considers the key capabilities for managing a complex multiserviceprovider ecosystem (via an MSI role), as being a core IT competency that should not be entirely out-

sourced (see Figure 2).

DeliveringChange

SupportingInfrastructure

1

3

5

4

2

Rule: Never Lose ManagementControl of Your Strategic Vendors

Rule: Never EntirelyOutsource the Sources ofYour CompetitiveAdvantage in the Market

1. IT Leadership

2. ArchitectureDevelopment

3. BusinessEnhancement

4. TechnologyAdvancement

5. SourcingManagement

DrivingStrategy andInnovation

Figure 2. What Never to Outsource: Three Key Rules

Source: Gartner (August 2013)

Before considering an MSI role, it is important for your IT services sourcing team to build up the 10

multisourcing management competences, to an adequate level (at least level 3) of maturity to ad-dress the complexities of the multisourced environment.

In the case of a hybrid traditional and cloud multisourcing environment (such as when cloud services

are acquired and brought into the end-to-end IT operating model), then the minimum required com-

petence is 3.5 on a scale of 1 to 5.

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A common way for an IT organization and its IT services sourcing function to achieve a mature

enough level of multisourcing management capability, is to act initially as either its own MSI and CSB

for those cloud services selected as part of the cloud-enabled sourcing strategy and invest in build-

ing up the required multi-vendor management skills necessary.

Owning better than average market capabilities on a core competence (for example, IT services

management, provider management and cloud services management) is one of the best ways to

help improve business competitiveness and deliver end-to-end service and business outcomes.Unfortunately in reality, the situation is less than ideal, for example:

Only 8% of business organizations dene themselves as sourcing leaders.

A lack of fundamental execution capability in this area aects 42% of organizations.

While 31% of organizations with outsourced IT services are considering re-insourcing, (often as a

reaction to bad levels of satisfaction from outsourcing deals), less than 10% of organizations actually

re-insource signicant amounts of work.3

Those organizations increasing their cloud service utilization without strengthening their multisourc-ing management capability (for example, by not becoming their own MSI/CSB) will nd themselves

progressively marginalized in legacy system management by external service providers.

To avoid this scenario, sourcing executives should follow these steps:

Assess the strength and maturity of their multisourcing competences.

Evaluate the risk of being bypassed by business units, when in a key MSI/CSB role and if there is signif-

icant risk, act by understanding the critical competences, processes, tools and activities needed.

Put an action plan in place to build up the 10 core competencies as part of a longer-term plan to im-

plement an MSI role.

Gain a Clear Understanding of MSI and CSB Roles and Evaluate What Invest-ment is Needed for Implementation

Put more simply, the denition of MSI/SIAM and CSB roles can be expressed as: an internal or exter-

nal service provider able to integrate, orchestrate and manage (on a day-by-day basis), the end-to-

end delivery of a complex set up of IT and cloud services for a competitive business (see Note 1 for

further information).

Clearly, in a digital world that is being transformed by the Nexus of Forces into a hybrid ecosystem oftraditional and cloud-based IT services, MSI and CSB roles are likely to coalesce.

While there is strong similarity in the roles, they also complement each other. The MSI role has

evolved out of the need for complex service integration requirements across a smaller number of

multiple vendors with large, but stable, processing requirements.The CSB role is evolving out of the

more dynamic cloud environment, which might involve more diverse external service providers,

prone to frequent change.

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Table 1 summarizes the evaluation components to provision a joint MSI/CSB role.

Table 1. Joint MSI/CSB Evaluation Categories

Track Record in

Multisourced

Environment

Ability to Inte-

grate Operations at

First-Level Help Desk

Ability to Deliver and

Manage an End-to-

End Service

Ability to integrate

Cloud Service Brokerage

Functions

Experienced in

managing multipletraditional and cloud

service providers

Industrial-strength

help desk capable ofsupporting an ecosys-

tem of providers.

End-to-end service

delivery quality in-cluding related end-

to-end performance

reporting.

Automated service bro-

kerage and orchestrationfunctions.

Service management

framework

Supports multivendor

service portfolio/

catalog.

Collaborative service

management of

multiple providers.

Toolsets for integration

between cloud manage-

ment platforms and CSB

aggregation tools.

Quality management

framework

Ability to establish,

measure and enforce

OLA.

Understanding of

business objectives.

Cross-platform

integration toolkits for

IaaS to aPaaS to SaaSlayers, for example.

Value-added

governance frame-

works and OLA tem-

plates

N/A Workable governance

frameworks.

Ability to establish,

measure and enforce

extended OLA across IT

and cloud services.

OLA = Operational Level Agreement; MSI = multisourcing services integrator; CSB = cloud services brokerage, IaaS = integration as a service; aPaaS =

application platform as a service; N/A = not applicable

For further information on CSB integration see Manage Your Cloud Services With the Right Roles and Technologies (G00238933) and What IT Leaders

Need to Know About Cloud Services Integration: Proactively Address the Challenge (G00247426).

Source: Gartner (August 2013)

In the absence of an ideal toolset to manage any hybrid cloud combination, organizations will have

the time-consuming and expensive task of developing their own unique case combination of tools

and capabilities to manage their hybrid environments. The availability of pre-congured tools and

environments and the experience of someone with previous experience of implementing these ele-

ments of the joint role would be very useful.

Sourcing executives should:

Clearly understand what the joint MSI/CSB role is about in terms of identied capabilities, processes,

tools and tasks required, for internal or external execution.

Evaluate the gap (in terms of capabilities, tools and experience) between the current state and the

required target multisourced state. This is the capability gap you need to overcome with investment

and a clear strategy.

Evaluate the potential cost (sta, tools, training, implementation and ongoing services) for the imple-

mentation of these capabilities and obtain the required budget to address this expense.

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Evaluate all Potential Sourcing Models for the MSI Role

There are several ways an IT organizations can implement a multisourcing services integration and

management (MSI/SIAM) framework:

Build it yourself options (project based)

Bring in external talent or re-skill the retained organization in the processes and capabilities required

for MSI and CSB roles. At the same time, acquire and build new technical (cloud related) and man-agerial (demand management and strategy management) capabilities, often at the boundaries or

outside your control area. Specic toolsets will also need to be acquired to build interfaces between

help desks, as well as for end-to-end (E2E) performance monitoring. This option may easily encounter

budget, skills, timeliness and political limitations. The existing risk of disintermediation and the capa-

bility gap means that youre likely to encounter these limits again, which will be dicult to overcome

in the current business climate.

Launch a formal project across dierent units (such as IT infrastructure, IT applications, F&A, HR and

business units) and funded through the IT budget or a specic business initiative to create the MSI/

CSB role. Despite being an essential requirement, its not always easy to get enough funding and ex-ecutive support to ensure ongoing focus for this kind of a project. In this case, the entire cost, invest-

ment and risk for the project should rest on your enterprise, with no leverage of external experience.

Launch a formal project using an external sourcing consulting provider with expertise in establish-

ing the MSI role, along with ITIL implementation, service management and related tooling, cloud

migration and integration and cloud service brokerage expertise. In this case, despite leveraging the

third-party experience, the investment costs and risk will be entirely born by your enterprise.

Outsource the Role

Use an external MSI with CSB capabilities by contracting an external MSI/CSB to take on this role typically in parallel with other IT or cloud services (a tower-like service desk or data center outsourcing

and the cloud services brokered by the CSB), for a term of three to ve years, depending on service

tower contract term. At the end of the contract (in case you switch to a dierent arrangement) the

tools, intellectual property (IP) and automation is likely to go with the incumbent and a new provider,

or the internal IT department will need to re-create these capabilities. This is a semi-proven option,

which is expected to evolve over the next ve years.

BOT option

Finally, a sourcing model that could provide an interesting balance between leverage and reuse (of

providers experience and IP), creating a customized implementation to manage your unique hybrid

environment and ownership of the capability at the end of the contract. This is a BOT model in which

the service provider is contracted to implement the MSI tools, processes and capabilities (for exam-

ple, for the rst six to 12 months of the contract), then manage the execution of the role (that will be

co-executed in part by client resources and provider resources) for a period of time (such as one to

two years) and then formally handing back the role (and the related IP and tools) to the client.

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The client will be in position to outsource some activities of the MSI/CSB back to the same provider

(or to another provider), integrate new cloud services or use a CSB in the hybrid cloud service envi-

ronment. The advent of a range of SaaS-based help desk and systems monitoring toolsets will also

assist in making toolset decisions much more transparent in the BOT scenario.

Sourcing executives should:

Evaluate the dierent sourcing models and use the optimal option to create the MSI/CSB role, for

example, an outsourced MSI/CSB, an internal role built through reskilling, external project or a BOT

sourcing model.

Leverage as needed, a range of consulting or service providers to assist in this MSI journey.

Continually Reassess Your IT Sourcing Strategy and the Right MSI SourcingOption to Maximize Value and Control Risks as Cloud Services Evolve

Client organizations are refreshing and advancing their sourcing strategies at least once a year. The

focus is often on a specic decision or service area (such as the data center, application mainte-

nance, a new project or a SaaS solution) and the service integration/coordination role is often notaddressed. The lack of clarity on who does what in the management of a complex hybrid cloud will

be one of the major cause of dissatisfaction for hybrid IT and cloud sourcing strategies in the future.

By adopting the Gartner sourcing strategy framework and comparing risk, opportunities and the cost

of the dierent options (internal, external or BOT), a sourcing executive will be able to identify the

best course for the implementation of a MSI/CSB and whether or not to control the external brokers

or integrators.

Based on the relatively low level of maturity for MSI and CSB and the relative high value of a success-

ful implementation, it is likely that a BOT option will prove to be a popular model for implementingthis role in the next ve years so that clients can maximize value and control risk of their IT sourcing

strategies in the evolution toward more digital business models.

Therefore, sourcing executives must plan for the next iteration of their sourcing strategy update, to

also identify the most appropriate sourcing approach to their joint MSI/CSB role and start evolving

toward it, either with an internal or an external strategy.

Case Study

Organizations have implemented the MSI role in various ways, some successfully and others not. The

following short case studies demonstrate various internal and external options and scenarios used inimplementing the MSI role

External MSI Duplication of Eorts

A large nancial organization selected a Tier 1 CSI to be the MSI for its infrastructure services on topof three other selected providers. It took 18 months of negotiation to agree an MSI, ITIL-based con-

tract treating all processes and contact point between clients retained service management, archi-

tecture, application teams, the MSI and the three providers.

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The overall operation created bureaucracy and not agility, as the MSI role was implemented from the

middle upward toward the client-retained organization and down to service provider. Tools integra-

tion was a major problem and the entire deal was deemed unsatisfactory and closed down. All the

eort was lost.

External MSI Built on the Fly

A range of large federal government agencies have engaged their lead service providers to take on

the MSI role. We have noted that providers have used these agencies to build up their MSI capabil-ities and related toolsets. Common feedback from the agencies was that while generally improving

E2E service outcomes, they felt that the provider used the project income from these additional ser-

vices to fund the development of their MSI knowledge capital and IP without transferring enough of

the benets to the client as it could have done. There is mixed feedback from these agencies on the

success of the role, with some of it reecting on the U.K. Governments SIAM approach.

External MSI Leveraging Other Experiences

A large state government and car manufacturer, respectively, engaged the same provider to deliver

the MSI role, covering a complex, whole of government/global business multi-sourcing arrangement.Some critical success factors (CSFs) to making this run reasonably well were a good governance mod-el, the ability to integrate service test tools, good integration at the conguration management data-

base level and creating a collaborative working environment among providers.

External MSI From Outsourced to Insourced

Over the past decade, a midsize federal government agency went through an MSI evolution of in-

sourced to mainly outsourced and has recently re-insourced the MSI role. It may well be considered

as an example of using an outsourcing cycle to follow a BOT model. For more details on this historical

case study outlining some of the lessons learned while the government agency engaged an external

provider to assist with the MSI role.

External MSI Aggregate Small Suppliers

A small federal government agency engaged an MSI in an IT as a service-type model, a lead provider

and approximately 15 smaller suppliers and providers.

Key lessons in this example were:

Deploying an incremmaintained rst-level help desk well and sustaining strong relationships with key

vendors as well as the MSI.

This arrangement is still ongoing for a historic case study outlining some CSFs and lessons learned.

Internal MSI Built Along a Multisourcing Strategy

Many clients fall into a standard do-it-yourself approach to multivendor integration and management

when moving from full outsourcing to a selective best-of-breed option. Zurich was a typical example

of this. This large global insurance group used selective sourcing for its IT infrastructure and managed

application services across six countries.

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It adopted a moderate best-of-breed outsourcing approach with a small set of providers. It is typical

of clients moving into second-generation best-of-breed deals without putting mechanisms in place,such as OLAs or well-dened contractual interfaces between providers. Additionally, Zurich had a

strong focus on application change management and application operation integration as part of an

evolving, centralized IT governance vendor management initiative.

Internal MSI Evolving From Basic Vendor Management to OLAs and MSI

Once clients have their vendor management (VM) organization in place, they tend to focus on im-proving their VM disciplines and in due course, introducing OLAs into the vendor ecosystem. Weyer-

haeuser is an example of this, by undertaking the MSI role and choosing not to engage an external

MSI to do the role.

Weyerhaeuser made the common journey of single to multisourced and as a stepping stone, usedstrategic vendor management-like programs and focused on the 10 key management disciplines for

multisourcing, which is important if you follow a do-it-yourself management approach to your mul-

tivendor environment. The client also went on to leverage disciplines such as OLAs to further inte-

grate the working relationships among the vendors in its ecosystem.

Evidence

1Gartner analysts receive many inquiries concerning the strategic aspects of IT. Inquiries on IT strat-

egy issues across sourcing, procurement, enterprise architecture and business process management

totaled more than 4,000, of which more than 3,000 (an additional 20% year over year) concerned

sourcing strategies. More than 2,500 inquiries were identied specically in relation to IT services

sourcing strategy.

2See U.K. Cabinet Oceon ICT frameworks (as of 20 December 2012).

3Gartner Outsourcing and Strategic Partnerships Survey 2013, 330 respondents across North Americaand Europe.

Note 1Denitions of MSI and CSB Roles

A multisourcing service integrator (MSI) is a role undertaken by the client, or a third party contracted

by the client organization with an individual contract, to act as its agent to coordinate and integrateservice delivery in an environment that uses multiple internal and external service providers to deliver

IT and business process services.

Cloud services brokerage (CSB) is an IT role and business model in which a company or other entity

adds value to one or more (public or private) cloud services on behalf of one or more consumers of

that service via three primary roles including aggregation, integration and customization brokerage.

A CSB enabler provides technology to implement CSB and a CSB provider oers combined technolo-

gy, people and methodologies to implement and manage CSB related projects.

SOURCEGartner RAS Core Research Note G00239806, Claudio Da Rold, Jim Longwood, 21 January 2015

http://www.gov.uk/government/news/fewer-government-ict-frameworks-to-attract-wider-range-of-suppliershttp://www.gov.uk/government/news/fewer-government-ict-frameworks-to-attract-wider-range-of-suppliers

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