Tuesday, 7 February 2012

Service Integration

One of the questions I get asked quite frequently, given my job title, is

"What exactly is Service Integration?"

It is actually a very good question, not least because in my experience many organizations are persuaded by third party advisors to commit their long term service strategy to a service integration model without fully understanding what it is and what the implications are of what is a very big subject. So big in fact that it really deserves a book to be written about it. In the meantime this will have to do as an explanation of  what SI is, why is it attractive to organisations, and what the ITSM implications are if it is to be successfully implemented, including my top ten tips.

What is SI
It is clear that there is no single consensus on what constitutes SI. There is range of overlapping strategies that fall under the broad label of Service Integration (SI). The definition I find most useful is: 

“The management by a supplier filling some or all roles of the traditional retained service management organisation of e2e service levels delivered by multiple suppliers”

I believe that a key aspect of SI is that the SI provider acts as a virtual constituent of the retained organisation, but the paradigm SI model includes:

  • The SI provider taking on commercial risk for the delivery of services in return for outcome based rewards
  • The SI provider takes on a governance role as well as a management role
  • A 'Plug and Play' approach towards suppliers, allowing for rapid re-sourcing and effective 'co-opetition' between incumbents
  • The SI provider having full authority over all other suppliers
  • The SI provider driving innovation and transformation of service provision.
None of these elements are individually novel, and neither do they all need to be present. In reality many SI solutions are much less strategic in their remit than this and   in some cases there is little commonality between two approaches both legitimately labeled as SI.

For instance ownership of the contracts with other suppliers might stay with the retained organisation with  the SI provider only being  held contractually responsible for their own performance in monitoring and reporting on other suppliers. In other case the contracts might be novated to the SI supplier and the SI supplier held directly responsible for the failure of other suppliers to meet their targets.  In an extreme case, the individual suppliers might all be achieving their targets but the SI supplier is required to handover service credits because the required e2e service is not being delivered.

We are even seeing organisations who talk of providing an “internal SI solution.” If we accpet that as a valid use of the term does the the definition of SI become

"Any strategy designed to align the performance of individual suppliers with an e2e service delivered to users and customers"
Is that just a way of saying SI is the same as e2e service management? I believe that in many cases it is, even if that wasn't the original intent.
Why is SI Attractive?

As I've already said many organisations are being propelled towards an SI solution by an external advisor, and some observers have described SI as “a solution in search of a problem” An informal analysis of organisations adopting SI suggests that there are genuine factors driving them towards this approach. These include:

  • Struggling to understand how their complex value networks map on to both suppliers and customers
  • A lack of appropriate experience in managing multiple contracts and frameworks of service level agreements to specify a level of e2e service
  • They experience of individual suppliers comfortably meeting their contracted service levels whilst the overall service remains unsatisfactory to the customer and user communities
  • Wanting to see collaborative innovation from their suppliers.
  • Recognizing traditional approaches have failed to integrate suppliers into a common culture

In theory these can all be addressed by conventional ITSM best practice but the SI provider has the advantages of access to tools, skills and in some cases contractual relationships that are not available to an in house service management team. For instance a large outsourcer filling the SI role will be able to leverage global alliances with other suppliers.

A number of SI initiatives have been apparently cancelled, or replaced by conventional sourcing strategies, before contracts have been let because the IT department has not articulated or sold a business case that makes sense to their board. In particular a number of boards have questioned why SI is being planned as an additional layer rather than replacing managers within the retained organisation. The benefits for the business, as opposed to the IT department, have still to be quantified in the traditional terms of lower costs, improved quality, greater innovation and higher levels of assurance. 
Making SI a Success

As the SI market begins to  mature it is becoming easier to assess the features of a successful solution, at least in the short term. What is clear is that it is not a one size fits all solution, it is an approach that needs to be tailored to match an organisation's current and expected level of service management maturity, and their appetite for risk and innovation. 

My top ten stand out features of a well thought out approach are:

  1. Absolute clarity of roles, responsibilities and authorities across all parties and a common vocabulary
  2. The risk born by the SI provider has to be aligned with the level of authority they have over other suppliers.
  3. There needs to be a clear roadmap for the entire life of the SI contract that is linked to the delivery of value to the business.
  4. The SI TOM needs to be designed holistically across the retrained organisation, the Si provider and the other suppliers, rather than expecting a supplier’s SI capability to be bolted on to a pre-existing structure.
  5. A white box approach to data and information needs to be established by the SI provider to ensure there is one version of the truth across the value network.
  6. Establishing a truly e2e view of services to customers is a vital element, requiring the services of service architects using frameworks such as OBASHI
  7. Maximum benefit is delivered when the SI provider is the supplier with most “skin in the game” rather than a supplier limited to just providing the SI function. Whilst SI independence is important this can be guaranteed by appropriate governance and reporting lines.
  8. ITIL, ISO 20k and other frameworks and guidance cannot be applied out of the box. Asking the SI provider to “conform to ITIL 2011” is not a sufficient specification to ensure the desired outcomes
  9.  Process workflow needs to be optimised to take into account the differing service targets across the value network. Techniques such as lean and the Theory of Constraints are extremely useful in an SI environment.
  10. The retained organisation, SI provider and other suppliers need to develop a common and collaborative culture rather than developing an adversarial model

I believe that over the next two years we will be hearing an awful lot about Service Integration as a number of significant contracts to deliver SI are awarded. The UK's Ministry of Justice, for instance, is currently tendering for an £18m SIAM (Service Integration And Management) contract. As of today the market is still relatively immature, with very few organisations actually operating an SI model. My personal view is that as SI develops it will become more distinct from the simple e2e service management model, with more emphasis on the commercial and innovational aspects, but that the techniques developed under the SI banner will in turn influence more an more aspects of ITSM.


  1. When I have looked on some local SI applications (read = major failures), especially in the public sector, I have wondered wouldn't it have been cheaper to retain own IT and only outsource smaller bites.

    I see the EU bidding legislation as a part of the problem. It creates impossible situations where you need to fix a price for something unknown.

  2. Aale, That is one line of thought, but lots of small suppliers still need to be aligned, and that is the role of the SI provider. I would prefer to see an SI provider in place before the underlying service providers are chosen so that SI can influence their contractual service levels. I foresee possible problems with shifting to an SI model at the same time as letting the other services, unless the SI provider is also one of the major providers of the technology services. I feel the need for a follow up post.

  3. Thanks for this very much needy informative post.


  4. Agree with James. In an ideal world, the SI should first be in place before the supplier selection for the different towers/services. But this is usually not the case. Often times, SI is an after thought, and SLA definition for the SI can be a challenge as the client would need to fit it into the constraints. Wouldn't this be better delivered by the 'retained org' to avoid conflicts and vested interests.

  5. Good article James .....with companies going through though competition .. they want a trusted SI provider to act as a virtual constituent of the retained organisation ... in the last one year I have seen the demand for SIAM rising steadily ...

  6. Hi James, thanks for an insightful post. I have a relatively small client that is considering adopting an SI layer delivered by a 3rd party - potentially the same who is delivering End User Computing. Do you have any viewpoints on how large, costly or complex an organisations IT should be before it makes sense to introduce an external SI function/service?


    1. Mike, first apologies for the delayed response. It still takes me by surprise when people bother to comment on my ramblings.

      I think you can split it into layers of applicability. A very small organisation might be best looking at a business run cloud based service. I suspect for a textbook SI approach to work you need to be leveraging economies of scale.

      I have to remember sometimes, especially when debating with Rob England, that the deals I get involved with are typically $100m plus.

      Perhaps the ultimate question is about the skill set that the internal IT department can sustain.

  7. Excellent article. The role of the Service Integrator is amazingly critical, but equally amazingly misunderstood.

  8. I think the principles of SI are applicable regardless of scale but it is only at scale that you must define it as a specific and discrete function. In terms of 'how big is big' it is a question of whether the overall scale of the operation introduces an integration complexity thatis too big to be handled by individuals as part of their primary role.
    SI can also require a significant investment in complex tooling and use of a leveraged service can reduce the investment required.