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SIAM and multi-sourcing in 2016

CTOs are increasingly required to deliver ever more for less, and the SIAM tower model was much-discussed in 2015 as a panacea to the concerns of driving project efficiency while achieving consistent savings. How will sophisticated businesses look to implement their SIAM and other multi-sourcing strategies in 2016, and how should businesses evolve their own intelligent client function to match their skills to the aspirations of their projects?

In an economic climate where CTOs are increasingly required to deliver ever more for less the SIAM tower model was much-discussed in 2015. The SIAM tower model generates significant press and controversy, belying the fact that it is, in reality, a variant on a more familiar multi-sourcing model, evolved to recognise and provide for the reality that many businesses do not have experience and capability to manage multiple suppliers.

The debate generated by SIAM has been fuelled by the manner in which it has been presented as a panacea: the longed-for solution for businesses seeking to save cost and efficiency in service delivery. A well-managed SIAM tower model has the potential to drastically re-draw the contractual landscape, not just for the contracting parties, but for other comparable customers and service integrators, looking to the success or failure of any projects that test the water before they take the SIAM plunge themselves.

Exponents of SIAM will be quick to show how greater efficiencies can be delivered through the use of a service integrator and elimination of points of weakness, enabling greater savings through removal of the "margin-on-margin" inherent in a prime contractor/sub-contractor structure. However, the questions must be asked: are businesses ready for multi-sourcing? and are businesses giving the decision sufficient consideration at strategic level?

The SIAM tower model remains something of a novelty. Unsurprisingly there will be those who exercise caution in fully embracing and trusting major projects to a new and largely untested model. However, there is also a risk that businesses will be so eager to structure projects on a SIAM tower model that proper consideration of the business case for doing so, the understanding and management of risk, the changed dynamic of a multi-sourced supply chain, or the growth of an intelligent client function may be under-developed. The business strategy should be focussed on achieving the required outcome: the model is merely the tool for realising it and, like any tool, must be appropriate for the job.

Falling towers?

Anyone following the Government Digital Service's (GDS) comments on SIAM in 2015 may have been left scratching their heads at the sometimes contradictory and often ambivalent attitude towards the SIAM tower model. Despite the SIAM tower model having been accepted as common practice by many government departments, GDS deputy director Alex Holmes kicked off the year by publishing an unequivocally titled article "Knocking down the Towers of SIAM" attacking the SIAM tower model, in which he stated that combining outsourcing and multi-sourcing in a tower model reduced the benefits of each- a "Model (that) is not condoned and not in line with Government policy".

Meanwhile, a number of SIAM tower-based strategies were in progress among such bodies as the Ministry of Justice, the Highways Agency and Transport for London.

Such comments from GDS raise the question: if not a SIAM tower model, what alternative model should be used? HM Government's encouragement to its departments to attract contract bids from SMEs by moving away from large-scale outsourcing deals with big suppliers would tend to push customers towards a multi-sourcing model. Many customers are more accustomed to procuring services through a prime contractor-led model. Where these customers are now stepping into multi-sourcing models, it is not surprising that many lack the in-house skills and experience to manage these suppliers effectively. Thus, to fill this knowledge gap, service management is procured as one of the functions; but what is SIAM, in its simplest rending, if not a multi-source solution with service management as one of its functions?

Towers under construction 2016

In light of this high-level criticism of the SIAM tower model, it came as a surprise to many that the Metropolitan Police Service (MPS) nonetheless announced its intention to award a SIAM contract for a supplier to work in partnership with the Digital Policing Intelligent Client Function to outsource MPS's software development capabilities. Unlike procurements such as the Ministry of Justice and Transport for London projects referred to above, MPS's strategy was decided and implemented after, and with the knowledge of, Alex Holmes's much-discussed broadside against the SIAM tower model.

In November 2015, MPS announced that the SIAM contract had been awarded to Atos: a contract which, according to MPS director of digital policing Chris Naylor, "signals a change" in the department's IT delivery. This rhetoric is likely to be seen as an expression of faith within MPS for SIAM contracting, which will make the contract with Atos one to watch in 2016. Chris Naylor waxes lyrical about SIAM: "The SIAM Towers model is all about collaboration and leveraging the best capabilities from our technology partners. We have a joint commitment to continuous improvement, delivering vital savings for the Metropolitan Police over time and bringing innovation to the way the Metropolitan Police delivers and supports technology".

Entering an outsourcing contract with high expectations as to the efficiency and savings that it will deliver can often lead to disappointment when neither the scale nor breadth of such savings are realised. The burden of administration and risk is just as likely to increase as to decrease where services are multi-sourced.

The SIAM tower model continues to evolve, as businesses develop methods to maximise the potential savings in cost and efficiency that it can deliver. Disaggregating services and arranging them in towers, each falling within the ambit of a different supplier, can lead to a duplication of services, as common utility functions are required in support of a range of service towers. A solution to this outcome, which cuts against the "tower" vision of SIAM, is to deconstruct the towers and to take a lateral view of services, grouping them by service component rather than into towers. Essential services are then truly grouped by supplier, rather than being provided piecemeal across the supplier panel.

If MPS is placing all its IT eggs in one SIAM basket, it will be crucial that MPS has considered fully the necessary management role and resource allocation, and ensured that its intelligent client function is able to deal with this. The SIAM tower model is in many respects an unproved quantity, and will be managed in this case by what Chris Naylor has referred to as "the emerging Digital Policing Intelligent Client Function". With a newly formed and potentially inexperienced team feeling its way in the dark, it is to be hoped that the Digital Policing Intelligent Client Function is more than "emerging" if and when any of the SIAM towers start to wobble.

Building your Intelligent Client Function in 2016

Transitioning from a prime contractor-led outsourcing to a SIAM model will require redeployment and addition of internal resources: where a business has used a scaled-down retained IT capability to manage prime contractors, it is not sufficient to expect this team to be able to take on management of the SIAM provider. A business's requirement to transition services to best-in-breed multi-suppliers in a multi-service tower strategy presents challenges that are substantially more complex and numerous than those faced in more "traditional" single-supplier back office outsourcing. With the rise in the role of the service integrator or SIAM provider (either as a distinct entity or as a lead contractor), an intelligent contract management function must develop client-side capabilities for interface and administration.

A business's intelligent client function must be ready to meet the challenges of working with the SIAM provider to manage the service towers, and be able to recognise and respond to potential areas of difficulty before the services are outsourced. The customer must have the appetite to upskill this management team to become effective and, if possible, experienced in their role as SIAM governance professionals. Time and budget needs to be allocated to thorough due diligence in ascertaining that the SIAM tower model is in fact the appropriate strategy, and the SIAM provider should be procured and bedded in before the suppliers are selected.

Building an effective intelligent client function is easier said than done: proactive management of the project and the relationship with the SIAM provider will require an understanding of the outsourced services, the desired output, and their delivery, which must dovetail with procurement experience in the relevant sector, as well as the contract, service and relationship management skills required in any contract. Moreover, this capability must be agile in meeting the demands of the evolving services and relationship throughout the contract lifecycle.

An intelligent client must therefore:

  • understand and define its requirements and intended outcome fully;
  • use its knowledge of the relevant sector to contract with the appropriate SIAM provider and service suppliers;
  • support and collaborate with the SIAM provider; and
  • be versatile and responsive to the changing needs of the business and their effect on the services and overall strategy.

Embarking on a multi-sourcing service delivery strategy without first developing an adequate intelligent client function is a sure route to failure further into the contract life cycle. However, the work doesn't stop there, as equal care must also be taken in the drafting of the contract itself: simply agreeing terms and expecting to receive faultless end-to-end services from multi-vendors cannot be relied upon alone. Specialist advice on the unique complexities of the multi-sourcing environment and its pitfalls should always be sought, and a business that takes shortcuts at this stage sets itself up for future complications and expense. A successful and smooth transition to a multi-sourcing strategy will require well-drafted contracts and experienced advice on pragmatic and realistic delivery expectations, enabling the business to anticipate and obviate or make contingency for future bumps in the road.

A fundamental key to successful multi-sourcing is communication and collaboration between suppliers. Intelligent contracting, providing for cooperation and interface where synergies exist between suppliers, will enable both soft and hard measures to be taken as necessary to ensure that suppliers are able to work in conjunction, and are contractually motivated to do so.

To achieve this, a business should consider using a SIAM tower model only after it has given due consideration to the business case for the new operating model they require, and determined that the SIAM solution is appropriate. Such a process will require detailed knowledge of the business's current operating model as well as the requirements to achieve the target operating model. Services that will be outsourced should then be disaggregated into service components which will form the service towers. All additional time, cost and resources associated with this must be factored into the business case at an early stage. Time and cost expended on building the intelligent client function and seeking market-leading advice will pay the dividends of far smoother service delivery.

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