Impact of Service Integration on Retained IT_16022015.cdr

Global Consulting Practice
White Paper
The Impact of Service Integration on Retained IT
About the Authors
Satyendra Shrotri
Satyendra is the Service Integration and Management (SIAM) lead driving consulting
engagements and business development for Tata Consultancy Services (TCS) in the
Nordic region. He has more than 14 years’ experience in IT spanning business verticals
such as Banking, Transportation, Telecom, Retail, and Energy, Resources, and Utilities. He
has led and executed numerous consulting engagements and successfully driven
process initiatives in IT Service Management (ITSM), IT operational excellence, process
compliance, and in the service delivery space based on the Information Technology
Infrastructure Library (ITIL) framework.
Abhash Chandra
Abhash leads multiple engagements for TCS’ key clients in Germany. He is the
engagement manager for TCS in North America and leads various delivery, sales, and
presales opportunities in addition to the execution of key engagements. Apart from his
other responsibilities, Abhash leads the definition and testing of a ‘future state’ Business
and IT Operation Model for a leading European investment bank on a cloud platform. In
his 16 years with TCS, he has led and mentored various strategic programs for leading
organizations across the world. He has executed numerous assignments across a wide
spectrum of areas: IT operational excellence, ITSM, cloud computing, service automation,
organizational change management, business process improvement, Six Sigma, project
management, metrics consulting, business consulting, and software development.
Service Integration (SI) is the coordination of people, processes, and technology across
multiple service providers (both internal and external) to manage the delivery of end-to-end
services to the end-user and the business. The service integrator’s primary responsibility and
focus is to be accountable for the service, its availability, and performance, and to ensure it is
aligned to the organization’s IT goals and objectives.
SI establishes a set of processes, tools, and operational procedures to ensure robust and
effective delivery of IT services across vendor partners through the efficient coordination of
services and resources. As more organizations realize the benefits and potential of a service
integrator as a strategic ‘glue’ binding end-to-end services, it presents a new challenge for the
retained IT department. This kind of a partnership requires the IT department to revisit its role
and responsibilities, to reassess and upgrade the skills it brings to the table. It also needs to
understand its new relationship with suppliers and other internal departments as a result of
the introduction of a service integrator. Understanding the new expectations that the
business has from retained IT is important, since it shall have to navigate these changes
based on the organization’s business goals and changing dynamics within the IT landscape.
SI also offers tremendous opportunities for the retained IT department. The latter can realign
and refocus on governance, adding value to strategic transformation programs, and building
a workable model delivering value to the business.
Change is unavoidable. But it is critical to understand how that change is managed and
navigated. This paper addresses some aspects of this change and discusses the impact SI can
have on retained IT.
Service Integration and Management – an Overview
The Case for Service Integration
The Impact on Retained IT
How to Manage the Impact to Retained IT
Service Integration and Management – an Overview
Service Integration and Management (SIAM) is a new stream emerging within the service management space. It is
aligned to leading frameworks in the industry (such as ITIL and COBIT) and encompasses multiple dimensions such
as governance, project and portfolio management, vendor management, benefits realization, and tracking.
The IT industry’s various models of service delivery have evolved from single-partner outsourcing to a multi-vendor
and co-sourcing set-up. Each model has its pros and cons that the retained client IT organization has to align itself
to. However, gaps remain due to how the multi-vendor landscape is set up to deliver benefits and value to the
business and its drivers.
Many organizations are looking at SIAM as a possible way to architect the seamless functioning of various IT
partners and leveraging synergies. This paper looks at how SI impacts retained IT.
The Case for Service Integration
Business and IT Leadership Team
Retained IT
Service Integrator
Service Towers
End User
Data Center
Figure 1: A Typical SI Model
In a classic model, as shown in Figure 1, multiple organizations deliver services as vendors or preferred partners to
the client IT, and the client IT manages them. These services are often delivered in sub-optimal mode, and while
each service delivery organization reports the performance as positive or ‘green’, the business still considers IT
performance as ‘red’ (that is, below expectations). The primary reason for this ‘watermelon effect’ (green outside, red
inside) is the often weak or missing governance of these multi-supplier services.
Challenges encountered in a multi-sourced IT landscape include:
Weak governance and lack of an external view of the set-up
Sub-optimal end-to-end service even if suppliers meet their contractual obligations
The lack of strong in-house SI capabilities
The lack of an unbiased view of the supplier landscape within the IT estate
The result is:
IT’s involvement in day-to-day operational activities, rather than a focus on strategic initiatives
Failure to harness supplier capabilities to drive innovation
Duplication of effort and the resulting loss of energy and value
A service integrator is the strategic ‘glue’ that binds all these various service delivery organizations together. It
ensures everyone stays focused on the organizational goals and is aligned to the objectives for the service,
delivering benefits to the client—both the IT function and the business.
The benefits of a robustly managed SI framework include:
Improved governance and control achieved by well-defined roles and responsibilities, well-structured
governance forums, and uniform reporting. This provides for better comparison of vendor performance and
improved control over their activities
Increased efficiency and effectiveness by integrating service desk and support, implementing uniform standard
processes and policies, and proactive analysis of incidents to contain damage
Maximized value from suppliers through a rationalized application and vendor landscape, and through the use
of forums for vendor collaboration to ensure resolution of issues in real time
Improved predictability and service availability through the use of effective communication platforms and
channels among vendors; by ensuring processes, roles, and responsibilities are clearly defined and well
understood; and by implementing effective service level agreements (SLAs), tightly bound by operational level
agreements (OLAs), with vendors
The Impact on Retained IT
Organizations are increasingly realizing the need for well-architected service delivery to effectively bridge the gap
across multiple vendors. These organizations must understand that by adopting SI they are taking on a massive
transformation program that will have a major impact on the retained IT organization.
Introducing SI might result in a change of service expectations, roles, and delivery ownership; a change in
hierarchical reporting or the transfer of key employees over to the supplier organization; and, most critically, a
change in interpersonal relationships that drive day-to-day business.
These challenges of adopting SI have to be managed efficiently. The service integrator and IT leadership team
should work together to find the right balance between the roles and responsibilities of the retained IT
organization and the service integrator.
Figure 2 shows some functions that can be taken over by the service integrators. However, this depends on factors
such as:
The maturity of the IT organization and its internal processes and frameworks
The IT organization’s vision and objectives as well as the areas of focus for the retained IT organization
The level of governance and control that the retained IT team would like to exercise
Business and Retained IT Organization
Service Integrator
SI Governance (including Data Management)
Service Management
Vendor (Supplier)
Service Strategy
Procurement and
Service Design
Transformation Mgmt.
Program Management
Project Planning
Service Transition
Service Operations
Integrated Service
Billing and Invoicing
IT Operations
Change Management
Quality Assurance
Continual Service
Program Governance
and Reporting
Data Center
End User
Risk & Compliance
Risk and Compliance
Identity and Access
Information Security
Service Continuity
Tower - N
Figure 2: Functions that can be taken over by service integrators
Letting the service integrator take over all the functions listed under these five broad areas is not advisable. The
retained IT and the service integrator should split the work between them. The division of work should be based on
factors such as the span of control, alignment to business functions, functions that the retained IT would like to
manage jointly with the service integrator, as well as functions where the service integrator can bring in strong
expertise and experience.
All these functions have traditionally been the domain of the retained IT department. Business and IT organizations
are usually very reluctant to relinquish control, especially to an outsourced organization. The introduction of a
service integrator, if not handled carefully as an organizational change, might derail the entire transformation
initiative, and not just the service integration.
Key reasons for resistance include:
Loss of control over functions: The retained IT function traditionally maintains a close relationship with service
providers. These relationships are built over time, going beyond contracts and SLAs to become partnerships.
Introducing a service integrator can disrupt these long-standing relations. Initially, both the retained IT and service
providers can find it bureaucratic to connect with each other through service integrators. They may also perceive
the new service integrator as a threat to their current roles within the organization.
Data confidentiality and conflict of interest: The service integrator is often also an existing service provider for
one of the delivery areas. As a service integrator, it has access to data not generally available to a competitive
service provider. Access to commercial data may provide an undue advantage to the service integrator in future
How to Manage the Impact to Retained IT
The organization should have a clear set of objectives, aligned to its IT objectives, for both the retained IT team and
the service integrator. The various IT functions should add value and drive service quality. The IT leadership and the
service integrator should jointly arrive at a new operating model.
Some factors to be considered before arriving at the retained IT organizations’ responsibilities include:
SI Readiness
This should be judged from governance (strategic), delivery (organizational), and operations (technology)
perspectives. It provides a view of the gaps the service integrator can bridge and the areas and key business
interfaces that need to be owned by the retained IT.
The maturity of the retained IT organization is key to the success of the SI program. In organizations where the
retained IT is not very mature, the SI implementation program must build in a special focus on communication,
training, and setting up of a governance structure to ensure organizational SI-readiness.
Visible support from an executive sponsor can significantly contribute to the success of the program. Focusing on
improved control of the IT environment, the vendor landscape, and service levels will reduce internal stakeholder
resistance to the SI initiative.
Organizational Change Management
Organizational change management (OCM) ensures focus on training and up-skilling the retained IT personnel, as
well as on role changes, and helps set reasonable expectations for the SI initiative. Often, OCM is the most
overlooked aspect of any big transformation program. Many SI implementations do not consider OCM as a factor
that affects the acceptance and eventual success of SI. This can have costly fallouts and result in big failures.
Defining and assigning new roles and business change impacts, providing the necessary training, and having a
continuous feedback loop can ensure the retained IT organization’s concerns are being heard and addressed
proactively. Figure 3 depicts the change journey that the IT organization needs to embark upon.
Change Adoption Journey
Change Resistance
Change Acceptance
Figure 3: The Typical Change Adoption Journey
OCM should start as soon as the IT leadership starts envisioning an SI role being played by a service delivery
organization or a third-party service integrator. OCM requires active communication that goes beyond email
updates. Active engagement from the IT leadership and the organization change experts makes the change
journey less painful. With the IT function’s changing role in response to the change in expectations from the
business and IT leadership, the entire change journey, from denial to acceptance to adaptation, needs to be well
Factors that need to be considered for the success of this journey include: employee movement to different roles, to
a supplier organization, or into the retained IT team; changes needed to available skills; and the resulting impact of
all this on interpersonal relationships.
Functions that Need to Be Retained
As part of the effort to create and identify functions that add value, the retained IT team should work on strategic
areas that can transform the business. Identification, communication, and promotion of such value-adding
functions and responsibilities across the retained IT landscape is a powerful enabler for the SI program. It helps the
retained IT organization realign to business priorities and be viewed as a valued stakeholder, and encourages them
to support the initiative. Up-skilling and training plays a major role in the implementation and adoption of these
functions within the new organization.
SI Governance
Organizations should build in an SI governance layer with clear ownership of responsibilities as well as forums and
councils for executive engagement and to steer strategic initiatives.
Leadership is key to the success of any transformational program, not just for SI. In case of SI, the governance layer
assumes special significance as SI challenges the status quo across the multi-vendor landscape. SI relies on the
governance structure to ensure successful delivery of optimized and cost effective services across the multi-vendor
landscape. The governance structure should focus on separation of duties and conflict of interest issues, and lay
down guidelines to ensure effective service delivery.
Tool Infrastructure
A tool infrastructure roadmap should be designed and used across all service delivery organizations. The SI
program’s success is driven by decisions and governance based on data obtained from this tool infrastructure. The
key challenge is to identify, define, collect, and analyze the right data. Availability of the right data also helps
organizations make continuous service improvements.
Introducing a service integrator impacts the retained IT department in more than one way. It presents an
opportunity to rethink the role that the retained IT department plays in the wider organization, and use the synergy
between retained IT and the service integrator to enhance the entire IT organization’s contribution towards
business goals.
Effective OCM is required to unlock the potential of service integration for delivering business value. This can be
achieved through meaningful dialogue with the retained IT organization to ensure the change journey is seamless.
OCM principles should be utilized to address the changes in the workplace relationships that drive the business.
Organizational maturity and readiness to adopt service integration is critical to an effective transition. So is a
collaborative approach for arriving at roles and responsibilities between the service integrator and the retained IT.
The chosen operating model and effective governance are key drivers of success for SI.
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