Multi-Supplier Management: Supplier Engagement Model

SIAM and SMI will provide a service management layer that enables integration of multiple suppliers while for SI the outsourcing organization will have their internal framework or best practices that they adopt. In a multi-supplier engagement, irrespective of approach (SIAM /SMI/SI) you adopt the challenge always remains that how you manage your suppliers. This situation is complicated since no standard framework is available. Organizations have to entirely depend on want their consultant or service provider tells them.

Following figure depicts a vendor engagement model that can be used for any multi-supplier engagement approach:

Multi-Vendor Management Approaches - SI, SMI and SIAM

In continuation with the previous blog on Multi-Vendor Management Approaches, I would like to describe these approaches based on our understanding of how SIAM should be. I would reiterate that the way current models/approaches are designed, I do not see any significant differences between these models. Based on our research, myself and Rakesh have created our SIAM - Fluid Pump model. I would talk about it later as currently we are looking for publishing our model at a larger forum.

1. SI (System Integrator): This was the traditional approach whereby outsourcing was done to one or multiple suppliers and these suppliers were managed by the outsourcing organization themselves. There was minimal or no integration between the suppliers. Service Management existed in an ad-hoc fashion with each supplier having their own organization for service management. Matured organizations set up a Service Management Organization (SMO) to ensure some level of integration and manage the key operational service management processes (like incident, problem and change management) where interaction between multiple suppliers was required. From an organizational perspective the services provided by these suppliers predominantly lied in the operational layer of management. Some of the SIs eventually started playing the role of Service Integrator which was a precursor to SMI.

2. SMI (Service Management Integration): With the need to have a centralized service management and control on multiple vendors, one of the large suppliers started to play the role of a lead Supplier or lead Service Integrator and eventually the role of a lead Service Management Integrator. This approach is termed as SMI. In this case the overall strategic functions and some of the tactical functions are performed and managed by the organizations themselves. In most matured scenarios also all tactical functions (like managing overall service levels) are not performed by the lead service provider. But in maximum cases these have been limited to having a centralized service management tool and overall governance of operational processes. From an organizational perspective SMI lie in the operational and tactical layer of management.

3. SIAM Service Integration and Management: SIAM is an approach that drives service management from the strategic perspective. It provides greater control and flexibility to not only manage the suppliers but also the IT & business services. It is more like a mechanical control system. It creates a layer that establishes an effective communication, management, feedback and control between the business and suppliers. It ensures effective dissemination of organization's business direction and strategy across all suppliers. It provides the control that ensures governance, management and regulation of suppliers and business services. It offers the flexibility to simplify the transitions due to change of suppliers or due to change in business services, system and processes which may happen because of merges & acquisitions or demergers & spin-offs. It enables business oriented transformations across the suppliers and business services. From an organizational perspective SIAM spans across all the layers of management - operational, tactical and strategic.

This approach is applicable to the entire breadth of business and IT services that may be provided by multiple subsidiaries of business or suppliers of IT (internal IT or external suppliers) regardless of number of business or suppliers.

Evolution of Multi-Vendor Management Approaches - SIAM, SMI and MSI

For a significant time now we are seeing that businesses no longer depend on one IT service provider. There has been a shift whereby business relied on multiple service providers and in many cases there has been more than five IT service providers catering to a single business. Businesses reaped the benefits in terms of cost but what was overlooked was the complexity that would arise in managing multiple suppliers. The benefits were eventually offset by the complexity. This was a time when service integration as a concept evolved. Service providers started pitching themselves as service integrators.

As a result of the complexity in managing multiple suppliers, last couple of years has seen another shift whereby the businesses have started focusing on vendor consolidation and restricting the number of suppliers they engage with.  Gradually businesses have put forth a strategy whereby one of the suppliers is selected as lead supplier and are given an additional responsibility to manage other suppliers which is predominantly from operational perspective.

During this time concepts called Service Management Integration (SMI) and Multi-supplier Integration (MSI) evolved. Majority of leading service providers or service integrators have created their own approach or model around SMI.

Also, during 2012 OGC felt the need to have a framework or approach around service integration and management of service providers. They named this approach as Service Integration and Management (SIAM). Also, a work group was constituted to create and detail SIAM. This working group had come out with their initial work but before the concept could have seen the light-of-the-day Axelos was created (decision on formation of Axelos was taken in mid-2013). I do not have any information regarding what happened to the investments and work of the working group.

This also resulted in number of SIAM models or approaches coming to the market led by Accenture, IBM, TCS, Capgemini and Atos. Off-late other service providers like HP, Wipro, etc. have also been pitching-in.

Since the conception of the SIAM working group by OGC, I had been following the developments and doing my own research towards what business challenges are and what should be covered as part of SIAM. I have been working along with one of friends, another ITSM expert, Rakesh to create our own SIAM model. This model is based on our extensive research in this area. We are calling this model as SIAM Fluid-Pump model inspired by the mechanical concepts (Though we are not mechanical engineers J) we learnt during our engineering days.

Market already had SMI (MSI as an approach did not really convert into a model or approach adopted or named by IT service providers) and various service providers including Capgemini has their models named after SMI. Then, why do we need SIAM and SMI.  Are these two approaches same? Additionally number of organizations and service providers has Service Management Office (SMO) responsible for managing service management processes with some of the activities spanning across all the IT service providers for a customer. This threw up another question for us - How is SMO different?

These questions had troubled us a lot. We got our answers as our research progressed. I will describe these concepts in my next blog providing a clear demarcation between these approaches.

Please note that my descriptions are more from the way these approaches should be and may not fit into the way things currently are. In most of the models that I have seen, I do not see any difference between SMI and SIAM. At times SMO also looks too similar.