The Multi-sourcing Challenge

Roger Camrass; CIO-Connect

Chris King; Capgemini

Horizons 2012 survey identified multi-sourcing and Service Integration as leading CIO issues

2012 Horizons

Research question: How critical is Service Integration in achieving effective multi-sourcing?

How do we define service integration & management?

Business Stakeholders

Strategy, Sourcing Governance VMO Level

Operational Services Integration Layer

Service Desk

Comms Deskside Desktop InfrastructureApplications

Management

Applications

Development

Forrester Research Inc, “Building The Services Integration Layer In Multisourcing” Bill Martorelli, September 28, 2011

Service Integration & Management

We conducted 25 face-to-face interviews with CIOs

Aggregate Industries Alliance Boots Astellas Bank of America Bank of England BAT BUPA UK Camelot Coop Group Essex CC E-sure Igloo

Jardine Lloyd Thompson Kingfisher Legal & General NSG Pilkington Nationwide RSA UK Severn Trent TD Bank TT Electronics TJX Tullow Oil Virgin Media

The Multi-sourcing Challenge

A Why has multi-sourcing and SIAM become so

important to the CIO community?

B How are business requirements for IT services

evolving?

C How are CIOs adapting currently changes in the

supply-demand environment?

D How might CIOs best prepare to exploit multi-

sourcing in the next two years?

The Multi-sourcing Challenge

A Why has multi-sourcing and SIAM become so

important to the CIO community?

B How are business requirements for IT services

evolving?

C How are CIOs adapting currently changes in the

supply-demand environment?

D How might CIOs best prepare to exploit multi-

sourcing in the next two years?

a. Outsourcing no longer meets CIO expectations – 70% of contracts fail to deliver full value

First Generation

Second Generation

Third Generation ??

Prime Contractor Best in Breed Utility

A. CIOs see a gap in their internal IT capabilities

1.Skills

2.Processes

3.Tools

• Outsourcing of IT has diminished the internal skills base

• Many of the core processes are not visible to IT

• Retained tools are frequently inadequate to monitor performance

a. Cloud is enjoying widespread adoption ….

Cloud class Examples 2016 revenue

Infrastructure Amazon $71B

Platform Microsoft Azure $35B

Service Management Service Now $3B

Software Salesforce $103B

Digital Marketing Adobe $21B

TOTAL $228B

The Multi-sourcing Challenge

A Why has multi-sourcing and SIAM become so

important to the CIO community?

B How are business requirements for IT services

evolving?

C How are CIOs adapting currently changes in the

supply-demand environment?

D How might CIOs best prepare to exploit multi-

sourcing in the next two years?

b. Back-office systems require efficiency and stability

Key parameters for back-office systems (under CFO influence) • Cost (efficiency)

• Performance (Stability)

• Timescales (Change)

b. Front-office systems require speed and agility

Key parameters for front office systems (influenced by CXOs) • Business Value (growth)

• Business agility (change)

• Business Risk (investment)

c. The Multi-sourcing Challenge

A Why has multi-sourcing and SIAM become so

important to the CIO community?

B How are business requirements for IT services

evolving?

C How are CIOs adapting currently changes in the

supply-demand environment?

D How might CIOs best prepare to exploit multi-

sourcing in the next two years?

c. Tier One maintains the IT Vendor ‘ecosystem’

Applications • SAP • Non-SAP

Infrastructure • End User • Data Centre • Networks

c. Tier Two seek new cloud providers

2. Business Units - Revenue driven

3. Enterprise IT - Efficiency driven

1. End-Users - Convenience driven

The Multi-sourcing Challenge

A Why has multi-sourcing and SIAM become so

important to the CIO community?

B How are business requirements for IT services

evolving?

C How are CIOs adapting currently changes in the

supply-demand environment?

D How might CIOs best prepare to exploit multi-

sourcing in the next two years?

d. To re-cap, businesses are polarising in 2 directions

• Inside-out requirements that arise from back and mid-office operations (e.g. finance; HR and supply chain)

• Outside-in requirements that arise from customer facing activities in the front office (e.g. mobile applications and social media)

• Decision timescales within the front office are becoming dramatically shorter – often weeks or months rather than years

• Each area requires a very different IT response

d. Cloud sourcing decisions are often made by others

Source: Capgemini, “Business Cloud: The State of Play Shifts Rapidly”, November 2012

d. CIOs have to satisfy two masters

Demand side

Supply side Strategic relationships Transactional relationships

discovery

planned

1. IT is the Business

2. IT is an enabler

3. IT is master of enterprise

services

4. IT manages the ‘walled

garden’

OUTSIDE-IN

INSIDE-OUT

d. And there are some tough strategic challenges

Stressed ITbudgets

Renewals & Remediation

Cloud serviceadoption

Need for innovation

Stressed ITbudgets

Renewals & Remediation

Cloud serviceadoption

Need for innovation

Stressed ITbudgets

Renewals & Remediation

Cloud serviceadoption

Need for innovation

Stressed ITbudgets

Renewals & Remediation

Cloud serviceadoption

Need for innovation

• Having control of IT service delivery is a pre-requisite to being able to exploit cloud services...

• You have the best IT suppliers but have you got the best IT service?

• Just conduct another procurement and hope that it works better this time...

• Cost Pressures, access to skills and quality, need to invest in new services...

d. This is what we see in the market

Considering the Future • No significant issues with current relationships • Formulating future strategy for IT service

delivery and sourcing

•How do I shape the future •What do I do next? •How should be set up for the next 3-5 years?

1

Considerations Three typical scenarios

Dissatisfied • Existing supplier operating to contractual

commitments but still not delivering value • Not happy with governance & control

•Is there an alternative? •How can I improve my existing approach? •How can safely introduce a change?

2

Distressed • Unacceptable supplier performance • Inadequate governance, measurement, control • Unable to resolve within the current

framework

•I need to change quickly, but not sure how •I don’t want to end up in the same situation through a costly procurement

•My business feels IT is constraining

3

d. What is the ‘size of the prize’ for SIAM?

Business Stakeholders

Strategy, Sourcing Governance VMO Level

Operational Services Integration Layer

Service Desk

Comms Deskside Desktop InfrastructureApplications

Management

Applications

Development

Forrester Research Inc, “Building The Services Integration Layer In Multisourcing” Bill Martorelli, September 28, 2011

Waste!

d. What does success look like?

Our experience is:

• Major incidents reduced by c40%

• Time to fulfil service requests reduced by c50%

• Retained IT FTEs reduced by c40%

• Governance overhead reduced by c80%

• An ecosystem speaking the same language

d. How do you get there?

Transform

Extend

Connect Connect the Operations

Extend the Reach

Transform the Business

d. Where does the CIO go from here?

1. Develop and implement your own processes

2. Build your own tooling platform

3. Hire the skills from the market

d. Where does the CIO go from here?

1. Buy a managed service keeping control of tooling and processes

2. Outsource taking advantage a complete and proven offering

3. Engage a partner to take-on, transform and work-out leaving you in control