Outsourcing isn’t new. It’s been on the agenda for CIOs for many years, but its complexities have evolved rapidly – particularly with the rise in multi-sourcing.
The drivers for outsourcing to multiple suppliers range, from cost incentives, not wanting to put all your eggs in one basket or being attracted to big vendors and the capabilities they can bring.
While outsourcing can help achieve such targets, the reality is that this is rarely the case. Research from Gartner found that over 60% of outsourced services fail to meet the business outcomes for which they were contracted.
Of course, the reasons for this vary greatly, but what can be ascertained is that there are common challenges experienced in the management of a multi-vendor landscape. Here we’ll cover many of those universal frustrations – if they’re familiar to you, take that as a sign that you need a stronger multi-sourcing approach. Fear not, though, we’ll also share the solution you need to drive that new approach: SIAM.
1. Poor coordination between vendors
The typical setup of a multi-vendor landscape is a tower structure, where each tower (vendor) bears responsibility for their own agreed service using their own tools, processes and reporting systems. However, this siloed approach creates a number of challenges and issues.
With each vendor using their own processes and reporting tools, coordination across towers is, unsurprisingly, hard to execute seamlessly. This applies to routine reporting, such as on performance and expenses, but the lack of coordination and consistency is most prevalent when issues arise. This will usually result in costly repair work and complex cross-vendor management for the customer organisation.
2. Lack of end-to-end ownership and accountability
Another issue that may arise in a multi-vendor landscape is the absence of ownership, resulting in tickets and issues bouncing between suppliers, blame-game scenarios and, ultimately, slow resolution of problems.
The lack of accountability can also come down to paperwork, with suppliers taking ownership to the letter of the contract. With a contract never able to cover every single situation that might occur or every precise detail, there will be assumptions on the customer side as well as the supplier’s side. As time progresses, with the original people who negotiated the contract perhaps no longer present, contract details can come down to interpretation – opening up the threat that responsibility is shirked.
Lastly, the ownership issue can be exacerbated by the loss of specific end-to-end knowledge of business and service chains in the IT landscape; this knowledge gap usually occurs as a by-product of outsourcing to a multitude of different vendors.
3. Duplication in costs
Each vendor operating with their own tools and processes doesn’t just mean headaches for the customer organisation, it actually leads to an increase in costs. First, due to the overhead, tooling and Service Management being included in each towers’ cost but also because the customer organisation finds itself forced to customise control processes, with added management responsibilities and a significant effort in management data translations as a result.
4. Quality issues
The pressure to meet SLAs is felt by all across the multi-vendor environment, but this leads to suppliers delivering only what is required of the SLA and not more. As such, the quality diminishes and in a hybrid landscape like this, even one poorly performing supplier can reduce the quality of the whole.
With blame shifting and poor cross-tower communication prevalent, identifying (and removing) the supplier that is bringing down the rest isn’t easy either. As a result, low-quality service can linger in the long-term and impact end-user satisfaction and loyalty.
On the other side, it can be easy to overlook a very important player in the delivery of IT Services; the customer! A common pitfall is to focus on per-vendor sub-optimisations, while the customer and end-user perception of the delivered quality is overlooked; and sometimes the originally agreed levels have even become completely obsolete.
5. Reduced rate of innovation and optimisation
With so much energy and focus spent on fighting fires and managing cross-vendor challenges, it’s no surprise that innovation, and even optimisation, takes a backseat. Improving processes and the quality of service delivery is impossible when each tower is operating on their own track and to their own timelines, priorities and agenda.
If day-to-day improvements aren’t getting any attention, chances are neither is innovation. It's ironic as you may very well have taken on certain vendors in order to open up internal capacity for innovation or to harness their innovation expertise and support in integrating DevOps or automation. To make that a reality, though, you first need to mitigate the day-to-day challenges of multi-vendor management.
Move to multi-sourcing harmony with SIAM
Ultimately, in multi-sourcing, as long things are running well, there is no problem. But, as soon as a problem does occur, all vendors will start finger-pointing at each other because within their own tower all appears green. However, the problem is still there to solve.
Quick and smooth problem-solving can only be achieved with collaboration and coordination across vendors. With suppliers working in silos to their own processes, this is impossible. Instead, you need seamless standardisation and integration of ways of working across the whole landscape.
SIAM (Service Integration and Management) facilitates the execution of mature processes so that every provider in the system works to the same goals and standards, improving efficiency, stability and service quality. It also helps identify where certain suppliers aren’t meeting expectations, empowering organisations to replace them with ease.
Diver deeper into SIAM and how it can help you overcome the challenges of multi-sourcing, download our latest whitepaper: Move to multi-sourcing harmony with SIAM.
Or to find out more about how SIAM could transform your multi-sourcing approach, arrange a no-strings-attached consultancy appointment: consulting@fruitionpartners.nl
This blog post belongs in the series: Move to a multi-sourcing harmony with SIAM
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