IT Service Management A Methodology for IT Managed Service Supplier Integration White Paper Author: Nicholas Collier Date 19th August 2018 Version: 1.0 © Copyright 2018 Nicholas Collier. All rights reserved. Duplication or content extraction of this document by permission only. Referencing is permitted. Managed Services Supplier Integration Introduction This paper provides a methodology for defining and implementing IT outsourcing arrangements. Due to the complex nature and large scale of outsourcing activities, one of the benefits from the use of a methodology is to ensure that the complete breadth of activity is methodically addressed and controlled. The method was derived from various experiences of supplier assessments, onboarding, planning, and implementation of large scale outsourcing arrangements for high profile organisations. The paper is written from the perspective of the host organisation, and not the supplier perspective. Why Outsourcing? There was a time, not long ago where IT was considered to be both an internal function and an optional tool enabling greater efficiency in the business. In today’s organisations, the business reliance on IT is such that an IT organisation alone would not suffice to create a competitive advance, and in fact only a business aligned IT organisation is required to gain a competitive advantage. [1] There is a fusion whereby IT is effectively integrated and entwined with the fabric of the organisation [1], from door entry to book keeping, sales, accounting and recruitment, from storing customer details to running business processes, and can be run as an internal or external function. IT is a critical yet highly complex, specialised and costly part of almost every organisation that exists, and it therefore requires a large management footprint. Many businesses chose to focus on their core business and leave IT to the specialists. Outsourcing has become a popular way to manage IT due to the fact that organisations can benefit from the specialism [2] and economies of scale of large service providers, and save themselves the effort of providing and managing the specialised capabilities. The primary purpose of outsourcing is to allow the firm to concentrate on its own internal competencies where it can achieve definable preeminence and provide unique value for customers. [3] The additional purposes of engaging with a managed services supplier is to benefit from externalising the specific effort, costs and risks with regards to delivering a service. In outsourcing situations, the supplier is typically responsible for delivery of the agreed service scope, and host (the client or principle organisation) is responsible and accountable for performing a service integration role, and supervising the supplier’s service delivery. In order to achieve the benefits of outsourcing IT, an organisation must undergo a complex service integration with a managed service provider. A number of firms that are well versed in outsourcing use a number of suppliers which deliver the same services in order to create an internal market, and therefore price competition among suppliers which is intended to lower costs. Thatcher NHS internal market: A creation of an internal market served by outsource partners was considered to be a major change that Margaret Thatcher made to the UK National Health Service. [4] What is a Managed Service? A managed service is an outsourcing arrangement whereby a large scope of work is undertaken by an external organisation as opposed to specific defined activities. The external provider works with Page 2 © Copyright 2018 Nicholas Collier. All rights reserved. Duplication or content extraction of this document by permission only. Referencing is permitted. Managed Services Supplier Integration autonomy and provides oversight to its own delivery scope; the process and functions moved from the host organisation which is proactively managed. Managed services are intended to improve operations, reduce costs, externalise risks, provide specific expertise, and allow the host to concentrate on its core business. Managed Services are usually charges with a single fee for the entire scope as opposed to for each activity. They are usually defined in a contact and underpinned with Service Levels (performance and quality metrics). Relationship with Service Design ITIL Service Design tends to be very comprehensive in a number of ways, however it doesn’t tend to cover Managed Services supplier integration in depth, hence this methodology compliments Service Design to cater for the outsourcing world. Planning for managed services outsourcing tends to fall under Service Design in ITIL terms, however this work may be carried out by a Service Design function as a specific piece of work, or alternatively, and more usually it may be carried out by a dedicated project. Assumptions This paper is about service integration, and it is therefore assumed that design and implementation of the technology stack is performed elsewhere. It is assumed that supplier due diligence has taken place and that the supplier has been evaluated for policy, governance and compliance by the Supplier On-boarding process. Define your SI/ SIAM organisation A significant outsourcing arrangement means significant organisational changes and often an entire reshaping of the organisation. The organisational changes required include among other things changes to roles, processes, interfaces and tooling. The point at which a decision is made to perform a major outsourcing initiative or significant changes to IT outsourcing arrangements is a good time for the organisation to define the new organisational SI or SIAM integration model which may span wider than the specific change taking place. Once the target organisation is defined, it then needs to be put in place. The first question that needs to be addressed is the question of what IT functions are to be retained as opposed to outsourced. Often the retained IT organisation includes senior management, service management, and the projects organisation and design authority. This methodology looks at delivery of various elements by a chain of service providers upstream to the host organisation. Where there are multiple service providers involved, the many streams of delivery are aggregated by service integration points, which are usually operated by the host organisation. The points of integration should be defined in the new organisation using the categories below which are broad definitions rather than absolutes. Page 3 © Copyright 2018 Nicholas Collier. All rights reserved. Duplication or content extraction of this document by permission only. Referencing is permitted. Managed Services Supplier Integration • Commercial Management – The point at which outsourced services are managed in terms of cost and adherence to contacts. • Service Management integration – The point at which outsourced services are managed in terms of delivery scope, quality (Service Levels) and issue management. • Service Integration/ SIAM (Service Integration & Management) – The point of integration of service providers, meaning the point to which day-to-day operational service is considered to be delivered to and therefore this point combines the various services from various providers into a single service or set of services. • Process Integration – A process is a set of routine work activities which may span multiple parties. The point of process integration is the point at which the end-to-end process is controlled and managed so that a disparately delivered process is integrated into a single point of delivery. (This is not necessary the same role as Process Owner). For example, a service provider may be responsible for the end-to-end incident process meaning it will triage incidents to other suppliers, tracking the incident through a chain of providers and providing follow up where other suppliers have not responded in the correct way, or within the required timescales. Note: These integration points are defined in this section on the organisation level. A number of these integration points will be repeated in the supplier relationships section because some of these integration points may exist in supplier organisations as well as the host organisation. There are a number of other considerations for setting up an organisational service integration framework and these relate to policy & process, desktop computing, ITSM toolset and business onboarding. The adoption of a common operating framework may involve building new resources, or it may simple involve adopting existing resources belonging to one of the parties and applying these to the other parties. A common set of policies and processes allows all of the participants in the integrated organisation to work to the same standards and adhere to the same set of rules, thus allowing interactions to operate in an expected manner. A consideration is the stipulation of the use of common desktop computing Common Operating Environment (COE), IT networks, IP address ranges, computing domains, internet domains, email domains, email messaging systems, instant messaging systems, collaboration portals and document formatting standards. The use of ITSM toolsets between the suppliers must be considered, and the common options for this are usually for the host or a key supplier to provide a single ITSM toolset, or for individual parties to use disparate ITSM tools which are integrated. It may be necessary to onboard suppliers into the organisations business operating framework,