DigiTech Magazine - UK CIO2020 - Autumn 2015 | Page 20

BUSINESS .................................................................................................................................................................... TECHNOLOGY No more big long IT contracts and SIAM doesn’t work…so what now? The days of wholesale IT outsourcing are coming to an end: businesses need more agility and technology is changing too fast for contracts to keep up. We have not seen much energy from the big providers to find ways to become more flexible or to drive new practices like DevOps, automation, continuous delivery or composible infrastructure. These trends are moving from being bleeding edge to becoming a basic requirement to stay in business. The wholesale outsourcing approach is destined to fail as it has evolved into a lose-lose relationship. Rather than investing time and effort to transform outdated IT, businesses tender for a supplier to sort out the mess. They use the supplier to spread the cost of the required upgrade over a number of years so the buyer and procurement can claim success. Hardware is upgraded, maintenance costs are lowered and fixed, IT has improved and everyone is happy. But we all know that is short sighted. The supplier at this point is massively out of pocket, they’ve only agreed because of the guaranteed long- term revenue and now they will spend the next few years sweating the assets and the contract to recover the debt, leaving the buyer with poor quality of service, and an aging infrastructure which because of the contract is prohibitively expensive to upgrade….and so the cycle repeats. 20 CIO Magazine Autumn 2015 Issue So maybe the Procurement capability and the Supplier community will evolve a new answer, but what should you do if your contract is ending now? The government solution in the latter part of the last decade was the Service Integration And Management (SIAM) model based on outsourcing towers, but there are probably more examples of that failing than succeeding. Now central government has publically moved away from that and we have recently helped them implement a new exemplar model in the UK cabinet office where the service integration capability has been brought in house. In our view, it is not that outsourcing IT services is simply the wrong approach, it is that organisations are still trying to outsource their problems and risk rather than discrete commodity services. We’ve seen many that just break one big amorphous contract into several slightly smaller ones and another SIAM contract (either insourced or outsourced) to manage them. All that achieves is to massively complicate your environment, introduce lots of conflicting agendas and remove any end to end accountability for service. The SIAM layer then has little revenue and most of the risk, not surprisingly it won’t work which has given SIAM such a bad name.