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than investing time and effort to transform outdated IT,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.
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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.