Lessons on Multi-Vendor Outsourcing

What is SIAM?

Driven by past failures and a desire for greater flexibility and efficiency, the outsourcing market has matured. The single-supplier outsourcing deals that previously dominated the market are now out of favour, and have been replaced by more complex systems. This change has led to the creation of SIAM (Service Integration & Management), an independent service integrator which provides a model to manage and coordinate the provision of services by multiple providers, with a particular emphasis on collaboration and innovation.

What industries use SIAM?

SIAM, can be used across multiple industries, but is particularly suited to the IT sector and to organisations with large internal resources, who are looking to keep up with the developing market.

How SIAM can help you?

Managing multi-vendor contracts is not without its difficulties; yet SIAM explicitly addresses these challenges while continuing to meet the demands of the market by:

• Facilitating access to a broad range of suppliers
• Availing of increased specialised knowledge
• Managing overhead costs
• Driving competition
• Increasing accountability

1. Establish your desired business outcomes and agree a vision with service providers as to how the contract can best deliver them

SIAM’s effectiveness hinges on the customer’s capacity to adapt to a new model through which it can carry out its business, while keeping their original vision intact.

2. Contractual structure

SIAM is not aw replacement for standard terms and conditions, and the onus will still be on the customer to ensure that its bottom line requirements are being met.
However, these provisions will need to be adapted to allow for flexibility.

• Establish a structure to facilitate the role of the service integrator so it can engage with the progress for both customer and supplier
• Ensure that roles and responsibilities of all parties are clearly outlined
• Treat all parties fairly and avoid placing unnecessary limits on any party so as to render its contribution unprofitable
• Grant freedom to service providers through which they are to meet expectations
• Select the key, non-negotiable terms of the agreement and apply them across the board to all service providers
• Provide incentives for suppliers to maintain an element of competitive tension
• Fairly apportion risk to create trust and to avoid the application of unnecessary risk premiums by suppliers
• Incorporate a ‘change management’ clause through which to effect change as the arrangement matures, either to allow new service providers to enter the agreement or to  provide leeway in order for existing service providers to exit.

3. Incorporate ‘collaboration’ into the agreement

Incorporating principles that require suppliers to work together is central to the success of a multi-sourcing project, as they set the tone for the level of engagement
between the parties. This can be done either by the creation of a clause that highlights ‘collaboration’ as an objective throughout, or by drafting a standalone  collaboration agreement to supplement the contractual relationship. Neither option is incorrect provided a sufficient level of protection is afforded for the customer.

Conclusion

The natural emergence of SIAM, as an approach for managing multiple service providers in large organisations, is an indication of both the complexity of this task and the needs of managers to find workable solutions. Adopting a SIAM approach is not in itself a panacea for the problems faced by managers of multi-vendor environments, but it does provide a proven framework of service integration models, within which management can devise a customised approach for their organisation. Collaboration agreements, predicated on a shared vision for business outcomes, are crucial building blocks of the SIAM approach, so it is worth investing time and effort into getting these agreements right!

Saros Consulting and Mason Hayes & Curran LLP would be pleased to assist your organisation in its SIAM journey.

 

 

Mark Adair
Partner, Technology
Mason, Hayes & Curran
+353 1 614 2345
madair@mhc.ie