Is Integration-as-a-Service the IT Model of the Future?

Shaun Daly, partner with outsourcing consultancy Sourcing Advisory Services, discusses how the third-party managed sourcing model--which he calls multi-sourcing Integration-as-a-Service--is poised to accelerate as the enterprise IT model of the future. He further explains what might drive adoption to this model as well as the pros and cons involved.

By Stephanie Overby
Thu, September 13, 2012

CIO — There's little doubt that multi-sourcing has become the dominant model for enterprise IT services. The average U.S. IT shop is working with 13.5 service providers overall, according to Gartner. But managing multiple providers remains a challenge for most IT organizations.

Some IT organizations, like the State of Texas Department of Information Resources, have decided to outsource the multi-sourcing management to an external master service integrator.

The idea was met with warranted fox-guarding-the-henhouse concerns by many industry watchers. But Shaun Daly, partner with outsourcing consultancy Sourcing Advisory Services, says adoption of the third-party managed sourcing model--which he calls multi-sourcing Integration-as-a-Service--is poised to accelerate. CIO.com talked to Daly about what might drive adoption of multi-sourcing integration services, the pros and cons of the model, and what it means GM is getting out of the multi-sourcing management game.

Doesn't engaging a third party to manage the IT service portfolio just add another layer of complexity to the arrangement?

The challenge for determining scope of what should be sourced or retained internally remains the same for multi-sourcing service integration. The question remains: who is best positioned to treat it as a core competency and, therefore, should be better positioned long-term to provide this service.

Our experience has shown that a select group of the suppliers have developed a best-in-class approach to ensure the enterprise receives a more flexible and healthy service. We've seen that elevating service integration as a discrete service delivery function actually addresses and increases value accretion by exposing the complexity, the misalignments, the overlaps and the gaps.

Historically, in a single- or multi-sourced environment, the real complexities are papered over. But "your mess for less" is an unacceptable answer for modern competitive firms. A coordinated service integration solution is necessary to realize the full benefits of best-of-breed multisourcing. Eliminating duplication and making processes consistent and repeatable are the keys to performance management.

Are some IT organizations capable of managing a multi-sourced environment themselves? What capabilities must they possess to do so effectively?

Yes, some IT organizations have the scale, experience, and maturity to provide integration services. However, much like the component services being outsourced, service integration is not typically a core competency of the client. It is challenging for clients to access and retain the skills required to provide integration services, and service providers are generally able to better leverage process and technology to maximize the efficiency of the delivery model.

10 Key Questions to Assess Application Outsourcing Maturity

It is more likely that, on a case-by-case basis clients are able to provide certain elements of the integration work--such as chargeback, asset management, or software license management. The interplay between the role of the multisourcing service integrator and the retained governance functions of the client will be a key planning factor in shaping the scope of services for the MSI.

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