Service Integration and Management (SIAM) Abstract
Service Integration and Management (SIAM) is an approach for managing multiple suppliers of services (business services as well as information technology services) and integrating them to provide a single business-facing IT organization. It aims at seamlessly integrating interdependent services from internal and external service providers in order to meet business requirement. Therefore well-defined tactics to manage these suppliers are the ‘match winners’ in SIAM initiatives. Due to the strategic significance of the Supplier Manager in establishing the Service Integration eco system, several organizations and SIAM providers elevated the order of preference of implementing processes around Supplier Management.
This paper analyses methodologies for effectively developing and implementing supplier management process based on author’s experience with a Nordic client. In this scenario, a supply chain approach has been adopted to differentiate procurement and contract management activities from Supplier Management scope allowing the process to focus more on supplier relationship management.
Service Integration market place is spiraling due to propensity of cloud, commoditization of ITO (IT Operation) and progression of third platform like Social, Mobile, Analytics and Internet of Things (IOT). The market maturity, operating capabilities, geographic reach and SIAM business models are undergoing relentless advancement. This offers diverse combinations and amalgamations in the design of Service Integration function from organizations to organization. Many will opt for comprehensively outsourcing to a specialist SIAM provider, some may choose ‘Do It Yourself’ approach and few may take on a ‘mixed’ approach of partially outsourcing the SIAM activities fencing vital elements of control in-house.
The inspiration to write this paper came from the backdrop of the third option, where the client secured strategic control of the vital functions like Contract Management, IT Procurement, Architecture and Service Design in house, leaving many typical SIAM processes including Supplier Management to transpose. In the wake of looming risk of doubling what the remnants of the client IT elements may be doing; it was absolutely indispensable to sketch out the frontiers and develop practical process integrations to avoid conflict of interest and stagnation.
The duel with Vendor Management Offices
Have you ever been stumbled upon a question? “What is different in Service Integration that a typical Vendor Management Office (VMO) cannot establish if the core of SIAM is managing suppliers?” Certainly I did! A couple of times… before I start aligning my thoughts as follows.
The key difference of SIAM Supplier Management with a traditional Vendor Management Office (VMO) is that SIAM’s modus operandi is to fetch multiple suppliers together; try to rationalize the differences in their ways of working, processes, procedures and often the tools; hence carve out a cohesive silhouette of Service Integration eco system. While traditional VMOs enjoy the liberty of having monolithic one-to- one approach to suppliers, the SIAM Supplier Management will have to take an up-hill journey of establishing fair rules of the club, building trust and transparency within the system and most importantly establish complex multidimensional accountabilities and responsibilities. The sky will not fall down if the in- house VMOs are biased and run like a blindfolded horse clinging only their organizational interests. However the SIAM Supplier Management to be seen as neutral, trust building and fostering the air of win-win in the eco system. Gartner’s famous term ‘water melon effect’ – where all SLAs are green but still the business services stagger, is hardly realized by the traditional VMOs except without heroic intuitive efforts. However the very purpose of SIAM Supplier Management will be identifying and dealing ‘water melon effect’; with the support from other processes like Service Level Management.
So if you are the one who has been catapulted straight in to the middle of the major SIAM implementation and when battle cries are all around you will learn your first lesson! ‘Give to Caesar what belongs to Caesar’; do not question the existence of VMOs or shadow supplier management but rather define the concourses clearly. After all, firefighting for sudden and radical change in the deep rooted organizational practices are penny wise and pound foolish.
‘Be half the battle’ Validate and align the scope
Validating the scope of the process and defining the functional requirement are to be the most difficult part of the process so that once you have completed this part, you have almost succeeded. Process scope will help you to define the boundaries and interlocking with other processes. The functional requirements will define the operational or tacit activities to perform process in a Business As Usual (BAU) mode. A good example of functional specification is conducting review meetings every six months with the suppliers.
Identifying the client side process owner and building a cordial working relationship with him/her is something which cannot be underestimated. Your entire effort is with a sword of Damocles hanging over in the absence of a supportive process owner who knows the client’s business functions and its people. Ensure that both of you will spend time together and decide the positioning of supplier management in the overall supply chain of the organization. The below picture is a sample representation of supply chain and positioning of supplier management in it.
In the above model, Supply Chain activities related to commercial and contractual elements are separated away from Supplier Management leaving the process to focus on supplier relationship and performance management.
Service Integration is about developing the right culture where suppliers work with each other and with the client, to the benefit of all. This cultural component of service integration is the stage many organizations find difficult to carve out and perhaps the most valued contribution from the supplier management will be navigating through this change. Defining a manageable and meaningful boundary as shown above will help supplier management to focus its energy on this area rather than carrying heavy weight luggage of contract, commercial and procurement management.
Shaping the battle plans
‘By failing to prepare, you are preparing to fail.’ -Benjamin Franklin
After you have gained crystal clear clarity on the boundaries, scope, functional requirements, the next step is to develop a practical battle plan comprising of deliverables and approach to materialize them. You must agree with the client process owner about how he would like to sign off the deliverables. Conduct detailed discussion sessions or workshops to agree the supplier management policies, number of supplier relationships to be managed and the need for different types of templates. Even though a detailed description of the deliverables, policies and templates are beyond the scope of this whitepaper, in brief you may arrange it in to the below sections.
- Supplier onboarding
- Supplier offboadrding
- Supplier Performance Management
- Governance and compliance
Agree the supplier management policies and how many suppliers to be targeted to start with. You should not be surprised by the enormous supplier landscape. Venturing to bring all these suppliers under the coverage of the process will be suicidal. Your client process owner should help you to identify a manageable supplier footprint to start with. One of the futuristic value additions of the SIAM Supplier Management processes will be to optimize and miniaturize these goliath vendor footprints to lean, agile and more potent. This is a clear expectation that needs to be set with Supplier Management operations team while you handover the process to them.
After making your war doctrine solid, invest your effort to develop the required procedures and templates for each of the four areas mentioned above. The recommended approach is to adopt a layered model having each process area consists of
- Policies – Statements that express commitments to quality and describe the aim of the process
- Processes – Activities that happens in order to achieve the aim of the policies
- Procedures – Tasks that describe how a given process will be executed
- Work Instructions – Detailed step by step instructions often with graphical representation on how a procedure can be executed in the intended technology platform. For example generating a report of Service Levels in the tool platform.
- Templates – Methods/mediums of recording the outcome of procedures or process steps. For example Minutes of Meeting templates.
The pictorial representation below is an indicative approach with order of preferences of each documentation areas.
Based on the author’s experience the level of tooling requirement except in the case of Supplier and Contract Management Information System (SCMIS) is very minimal for this process. Supplier Management uses information from other process areas like Service Level Management, Contract Management and Service Delivery Management. SIAM Supplier Manager is a proactive leader who has been positioned strategically in the entire IT eco system. You need to ensure that this role will not be bogged down with the responsibilities of creating tactical level reports or executing procedural instructions. What matters is the ability of the Supplier Manager to spend committed time to add expert opinions making use of the available information, like SLM reports. The Supplier Manager must proactively identify and be bullish to manage any red flags that may impact the overall service quality hence user experience.
In short, your overall battle plan must have three major mile stones.
Process Development – This includes all the above including chalking out the scope, target supplier footprints, creating the required documentations, required technology and identifying and/or gaining commitment from operation team to execute the process activities.
Supplier Engagement – This is the step where you start communicating to the targeted suppliers and educates them about the proposed Service Integration model, objectives and ‘way of working’. Next section of this paper will provide an overall line of attack.
Hand over to operations – If the process has been developed and deployed sufficiently, the next natural progression shall be to educate who so ever going to own and operate the Supplier Management process. At the end of the day you being a Subject Matter Expert will disappear but the operations team doesn’t!
Explaining each of these sections in length is not in the precincts of this paper due to brevity of space and fear of being too narrative. However it will not be logical to conclude this paper without citing few vital points around supplier engagement and developing Supplier and Contract Management Information System (SCMIS).
Engaging the suppliers
‘Alone we can do so little; together we can do so much’ – Helen Keller
So how do we nurture the collaboration that produces the high-quality, end-to-end services from suppliers as part of Supplier Management? The answer is to adopt an ‘ecosystem’ approach – an evolving network of relationships between the suppliers, client and Service Integrator supported by the set of protocols – and to manage it actively so that its focus remains the delivery of quality services. It is in to this eco system that you onboard or off board the suppliers.
Below are the key steps that you need to be mindful:
Bring the elephant on table –‘rules of the club’ and the ‘ways of working’
Many Service Integrators talk about collaboration and potential suppliers will happily agree to collaborate with everyone else. But this is meaningless unless everyone is clear on what ‘collaboration’ means in terms of day-to day-behaviors.
For example, contracts often say that a supplier will deliver a ‘seamless’ service with other providers. But how do you decide if that is being done? Defining the behaviors SIAM expects to observe is the key. A positive behavior label could be ‘when we hand over a ticket to another supplier, we take time to ensure that this supplier fully understands the context and work to be done’. The negative version would be ‘ticket is handed over like pitching a garbage bag into the neighbor’s meadow’
A new approach to making this happen is to act the Supplier Manager as an ecosystem ‘arbiter’ – an expert who will act as a focal point, coach the partners (including the client), call out good and bad behavior and help everyone lift their game. Invariably set these expectations loud and clear to the client that SIAM Supplier Management will not always in his/her side and don’t be surprised at times if it is on the other side of the table.
Very clearly articulate the expectations about this culture in your supplier onboarding presentation. Yes, you heard it properly; the first step in building the aforementioned eco system is to educate everyone who will potentially be part of it. The message in your onboarding sessions should be identical for all ecosystem partners (including the client) without any room to negotiate variations. Take time to prepare a detailed presentation deck and spend effort to schedule individual sessions with each supplier in the identified landscape. Set practical and clear expectations on the next steps like approach to negotiate collaborative agreements/OLAs, integration with SI tool platform and the periodical governance meetings needed as part of managing the ecosystem.
Defining what you want, embedding it in agreements like OLAs and creating the mechanisms to measure adherence is the start – but like any major change, the ecosystem needs to be managed to become a reality. Realistically, carving out a ‘fit to use’ collaborative model with OLAs is going to take time and if you try to be the ‘chief cook and bottle washer’ you will not be able to close your shop by sunset! Leave the remains to handle for operations team and processes like Service Level Management. Hence ensure that you will have sufficient level of support and documented process integrations with Service Level Management, Service Reporting, Contract Management and Financial Management.
Data is the new ‘oil’
The ITIL defines SCMIS as a database or structured document used to manage suppliers and contracts throughout their lifecycle. The SCMIS contains key attributes of all contracts with suppliers, and should be part of the Service Knowledge Management System. In ITIL V3 the Supplier and Contract Management Information System was referred to as the Supplier & Contract Database (SCD). This also means that life is simpler as you don’t need to have a tool or technology with ‘bells and whistles’ to establish SCMIS. In many organizations whatever is available currently for managing contracts and reporting will be more than sufficient and Supplier Management can join forces with them. If this is not possible, it can be as simple as a common folder or a SharePoint site. Supplier Management should be able to keep a wider panoramic view of various moving elements of SIAM and this repository is the window to the big picture. As long as this vision is clear, adopt a strategy of ‘stay foolish but hungry’ to continuously improvising the scope and embracing technology disruptively.
SIAM Supplier Management is a journey and as like any other it starts with the first step and have to go through calamities, demography changes, paradigm shifts and what not! Perseverance as well as ability to focus on the big picture will decide how well you finish. A travel plan which is based on common sense but flexible to adapt to practicalities and client’s business requirement is obligatory. This must be the ‘guru mantra’ for any SMEs (Subject Matter Expert) who has been tasked to implement the supplier management process which keeps them up at night!
Although there is no quick panacea to lift and shift a supplier management model there is no need to have knee jerking. You need to take small informed steps, understand the client’s environment and filter out the end objectives. Invest time in creating needed collaterals and keep it simple and straight, educate all stakeholders including the client and formally handover to your designated Supplier Manager.
Key to success is whether you can amalgam philosophy with practicalities to fetch conviction across the board. If so you made your day…Best of Luck…
Improving service integration: how to build a successful ecosystem – PA consulting