CHAPTER 3: SIAM STRUCTURES

There are four common structures for a SIAM ecosystem. The difference between each structure is the sourcing and configuration of the service integrator layer.

The structures are:

Externally sourced

Internally sourced

Hybrid

Lead supplier

The customer organization will choose a structure based on factors including:

Business requirements

Internal capabilities (including maturity, resources and skills)

Complexity of the customer’s services

The customer’s organizational structure and size

The legislative and regulatory environment

Customer budget

Current organizational maturity and capability in service integration and IT

Appetite for external sourcing/loss of direct control

Required timescales

Appetite for risk

Types and numbers of service providers to be managed

3.1 Externally sourced service integrator

In this structure, the customer appoints an external organization to take the role and provide the capabilities of the service integrator.

The service provider roles are performed by external service providers and/or internal service providers.

The externally sourced service integrator is exclusively focused on service integration activities and does not take any of the service provider roles, as illustrated in figure 9.

Figure 9: Externally sourced service integrator

3.1.1 When does a customer use this structure?

This structure is suitable when the customer organization does not have in-house service integration capabilities and does not intend to develop them.

It is also commonly chosen by organizations that do not have the resources available to take on the service integrator role, and do not want to have an increased headcount or the management responsibilities associated with selecting and maintaining service integration resources.

This structure is suitable for customers that are prepared for another organization to take the service integrator role, and who are prepared to have a high degree of trust in their external service integrator.

It relies on the customer empowering the service integrator and giving it the responsibilities of day-to-day coordination and control of service providers, implementing and coordinating processes and managing end-to-end reporting.

For this structure to succeed, the customer needs retained capabilities to provide strong governance over the external service integrator. These capabilities will identify the goals and the mandate for the external service integrator, and will communicate them clearly to all stakeholders.

The customer must allow the service integrator to act on its behalf. The customer should not bypass the service integrator by having direct operational relationships with the service providers.

Summary: Externally sourced

Suitable for:

Customers that are prepared for another organization to take the service integrator role

Customers that are prepared to place a high degree of trust in an external organization acting as their service integrator

Customers that do not have service integration capabilities and do not want to develop them

Customers that do not have service integration resources and do not want to add or manage them

3.1.2 Advantages

The advantages of an externally sourced service integrator include:

The opportunity for the customer to review multiple service integrators and then select an experienced service integrator with good reviews from previous clients.

The potential for faster benefits realization, as the service integrator’s expertise reduces the time to implement the SIAM roadmap, although the time required to select the external service integrator also needs to be considered.

The potential for improved value, as the service integrator applies its experience to manage the SIAM ecosystem in an efficient and effective way.

Separation of concerns: the service integrator can focus on the end-to-end governance and coordination of the service, processes, metrics and reporting, and the customer organization can focus on business outcomes and strategic objectives.

Access to established SIAM models, processes and toolsets, where the service integrator is providing the toolset.

Access to innovative practices from the service integrator’s experience on other SIAM implementations.

3.1.3 Disadvantages

The disadvantages of an externally sourced service integrator include:

The high level of dependency on the external service integrator adds a level of risk, including commercial, continuity and security risks.

The potential for higher costs related to the sourcing and management of an external organization

The potential for resentment from any internal service provider that is part of the customer organization but is being managed by an external organization.

The potential for resentment from the external service providers in the SIAM ecosystem, particularly where the service providers and service integrator compete in other markets. This can lead to relationship issues and poor performance.

The external service integrator’s models and practices might not be the best fit for the customer organization.

The use of an external service integrator can make it more difficult to change how the service integrator is working, because contractual changes may be required. This means the customer will be less agile and may result in higher cost.

There is a risk that the customer decides to appoint an external service integrator because they do not fully understand SIAM themselves. This is likely to increase overall costs of delivery and result in poor service because the customer has not clearly defined its own objectives.

The time and effort required for the external service integrator to build relationships with the customer organization and with the service providers, which is often not accounted for in the initial investment analysis.

The service integrator does not have a contractual relationship with the service providers, so without empowerment from the customer, they can be ineffective.

3.2 Internally sourced service integrator

In this SIAM structure, the customer organization takes the role of service integrator, providing the service integration capability. The service integrator role and the customer role still need to be defined and managed separately.

If the customer role and the service integrator role become inseparable and indistinct, service providers may interact with the customer as if it was part of a traditional outsourced ecosystem. The benefits of moving to a SIAM model would not be realized.

The service provider roles are performed by external service providers and/or internal service providers.

The internally sourced service integrator is exclusively focused on service integration activities.

Figure 10 shows the internally sourced service integrator structure.

Figure 10: Internally sourced service integrator

3.2.1 When does a customer use this structure?

This structure is suitable for organizations where the customer already has or intends to develop in-house service integration capabilities.

It is typically used where the customer wants to retain control and flexibility over the SIAM ecosystem, or where timescales do not facilitate the procurement and establishment of an external service integrator. It is also used by organizations that have a business, regulatory or legislative need to retain ownership of the service integration layer.

As part of this structure, the customer may use resource augmentation. This is an approach where many of the individual roles within the service integrator are filled using directly employed internal staff, supplemented by resources provided by an external organization. Even though some of the staff might not be directly employed by the customer, this still fulfils the criteria for an internally sourced service integrator as the customer has overall ownership and control.

Summary: Internally sourced

Suitable for:

Customers that have in-house service integration capabilities or plan to develop them

Customers that have business, regulatory or legislative requirements relating to the governance and management of service providers

Customers that want to retain control and flexibility over the SIAM ecosystem

Customers whose timescales do not allow procurement of an external service integrator

3.2.2 Advantages

The advantages of an internally sourced service integrator include:

The customer has full control over the service integrator role, with no dependency on an external company, or any of the associated risks and costs.

Valuable skills remain in-house and there is no loss of key resources or key knowledge.

The service integrator shares strategic goals with the customer organization, so there is no conflict.

The service integrator can be flexible and accommodate change without a requirement for any contractual amendments.

External service providers will not see the service integrator as a competitor and are thus more likely to cooperate and collaborate with the service integrator.

The service integrator can be established more quickly because it already understands the customer organization’s goals and drivers, and because there is no time required to procure and establish an external service integrator.

The service integrator is part of the same organization that manages service provider contracts, so has direct leverage over service providers, their behavior and performance.

3.2.3 Disadvantages

The disadvantages of an internally sourced service integrator include:

The customer must develop and maintain the service integrator capability, resources and skills, and design and implement toolsets, sometimes with no experience of SIAM implementation.

The customer may underestimate the number of resources and the expertise required for the service integrator capability.

The service integrator is seen as synonymous with the customer organization; this can make it more challenging for them to mediate between the customer and the service providers if there is a conflict.

The risk that the customer decides to act as the service integrator because they are not fully committed to SIAM, and do not wish to formally establish and outsource the structure. If SIAM is not adopted fully, the benefits will be limited and there will be a further risk that old ways of working continue.

Internal service providers may not accept the authority of the internal service integrator.

3.3 Hybrid service integrator

In this structure, the customer collaborates with an external organization to take the role of service integrator and provide the service integrator capability.

The service provider roles are performed by external service providers and/or internal service providers.

The hybrid service integrator is exclusively focused on service integration activities and does not take any of the service provider roles.

The hybrid service integrator structure is shown in figure 11.

Figure 11: Hybrid service integrator

3.3.1 When does a customer use this structure?

This structure is suitable for organizations that wish to retain an element of involvement in the service integrator role, but do not have sufficient in-house capabilities or resources.

In the hybrid structure, the service integration capability is created through collaboration between the customer and an external service integrator acting as a service integration partner. This can allow the customer organization to learn from an external service integrator that already has expertise in that role.

This structure can be temporary or permanent. If it is temporary, the hybrid approach will end when one of the following has occurred:

The customer has developed sufficient service integration skills and resources in-house, and has transitioned to an internally sourced structure.

The customer organization has decided that it no longer wants the hybrid structure, and has transitioned to an external service integrator or a lead supplier structure.

In this structure, it is normal to allocate specific service integration roles, functions and structures to either the customer or the service integration partner. This differentiates this structure from the resource augmentation approach that can be applied to the internally sourced structure.

Summary: Hybrid

Suitable for:

Customers that want to act as a service integrator but do not have sufficient capability or resources

Customers that want to learn from an external service integrator

Customers that want the flexibility of a temporary or permanent hybrid service integrator

3.3.2 Advantages

The advantages of a hybrid service integrator include:

The customer develops skills and resources, and can revert to an internally sourced solution if the service integration partner fails to live up to initial expectations.

Benefits can be realized more quickly, as the service integrator brings expertise and collaborates with the customer, reducing the time it takes to transition to a SIAM model.

Access to commercial skills and knowledge: the service integrator can help the customer negotiate with the service providers and avoid common mistakes.

3.3.3 Disadvantages

The disadvantages of a hybrid service integrator include:

The customer must develop a service integration capability, and recruit and manage resources

Without clear design, this structure can lead to duplication of skills, missed activities, confusion about responsibilities and poor definition of where the boundaries of operation lie.

Confusion for the service providers where a clear governance framework and communication plan have not been implemented.

When the hybrid approach is meant to be temporary, the customer may inadvertently build a long-term dependency on the service integration partner.

Organizations may adopt the hybrid model because they are reluctant to give up control, not for a valid business reason. This can lead to the benefits of SIAM not being realized.

3.4 Lead supplier as service integrator

In this structure, the role of service integrator is taken by an external organization that is also an external service provider. This can occur when:

An existing service provider successfully bids to be the service integrator as part of a procurement process

The existing service integrator successfully bids to be a service provider as part of a procurement process

One external organization wins two parts of a tender and so becomes the service integrator and a service provider

The organization that is a service provider and the service integrator is referred to as the lead supplier.

This structure is sometimes referred to as ‘guardian’ or ‘custodian’. It is important to emphasize that the contractual relationship in this structure remains between the customer organization and the service providers. The service integrator does not have a contractual relationship with the service providers.

Prime vendor

The lead supplier structure is different from the model known as ‘prime’ or ‘prime vendor’, where a service provider subcontracts other service providers to deliver the service and the customer only has a contractual relationship with the prime vendor.

Any of the service providers in any of the four SIAM structures could be a prime vendor, using one or more subcontracted providers as part of its own service delivery. However, these subcontracts are not visible within the SIAM ecosystem. The relationships in the SIAM ecosystem are between the service provider, service integrator and customer. The subcontracts of a particular service provider are not relevant from the SIAM perspective if the service provider can deliver its service to the agreed levels.

Figure 12 shows the lead supplier structure.

Figure 12: Lead supplier as service integrator

3.4.1 When does a customer use this structure?

A customer would choose this structure for the same reasons that it would choose an externally sourced service integrator, i.e. it does not have its own service integration capabilities or resources and does not wish to develop and maintain them.

In this structure, when the customer goes out to tender to choose a service integrator, one of its existing service providers may already have in-depth knowledge of the customer organization, and the customer knows and trusts it. This could facilitate that service provider also acting as the service integrator.

Conversely, the current service integrator may also have expertise in the delivery of one or more of the services (or service elements) and could be selected for that reason.

If a single organization is acting as both the service integrator and a service provider, there are management considerations that need to be addressed. These include:

Making sure there is no unfair advantage for the service integrator or the service provider

Maintaining the impartiality of the service integrator role

Ensuring that the customer is not being charged twice for the same capabilities

This requires clear segregation of duties in the lead supplier, often known as ‘Chinese walls’.

The service integrator and service provider roles should be viewed and managed as two separate entities (as if they were separate organizations). They will each have their own contract or agreement, roles, responsibilities and reporting requirements.

Ideally, different resources will work in the service integrator and service provider entities to reduce the likelihood of any conflict of interest.

Summary: Lead supplier

Suitable for:

Customers that have a trusted service provider that also has service integration capabilities

Customers that have a trusted service integrator that also has service provider capabilities

Customers that are prepared for another organization to take the service integrator role

Customers that do not have service integration capabilities or resources and do not plan to develop them

3.4.2 Advantages

The advantages of a lead supplier service integrator are mostly the same as those for an externally sourced service integrator.

There are some additional advantages:

Where the service integrator is currently acting as a service provider, the set-up process can be faster as there is an existing relationship with the customer.

From the customer’s perspective, the service integrator has a vested interest. If the service fails, it will be subject to penalties at the service provider level, so it has an extra incentive to deliver to agreed targets.

3.4.3 Disadvantages

The disadvantages of a lead supplier service integrator are mostly the same as those for an externally sourced service integrator.

There are some additional disadvantages:

The organization acting as the service integrator and service provider might not have effective internal governance, leading to knowledge ‘leaking’ between the two roles. This will create relationship issues between the service integrator and other service providers if this is perceived as an unfair advantage.

The organization acting as the service integrator and service provider might be perceived to be biased, even if this is not the case, which can also lead to the service integrator/service provider relationships suffering.

The organization acting as service integrator and service provider might charge the customer twice for the same resources, for example service desk resources shared between the two roles, or management resources shared between the service provider and service integrator roles.

The service integrator part of the organization could treat its service provider function harshly or unfairly to try to prevent any allegations of bias, which can also create relationship and service management issues.

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