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Matti Grönroos
Multivendor Service Management
The multivendor model creates more contract management work than the single-vendor one. The roles and responsibilities related to the agreements must be clear, to avoid repeating conflicts between the vendors. Also, the priority of service providers to not disclose trade secrets makes the model challenging.
Especially the SIAM model, where one vendor steers the other vendors, is often subject to overwhelming expectations. However, the challenges of the multivendor model are not related to SIAM only.
It is necessary to understand that the same vendors may sometimes be competitors, sometimes partners, and sometimes even clients to each other. In outsourcing exercises, it is usually desirable to create competition. This may lead to challenges to create a fruitful SIAM model.
The customers like to see that they buy value chains, and they expect the links of the chains to co-operate. However, the links are competitors to each other, and they do not want to share their secrets. That is why the customer shall not place its vendors in troublesome situations.
It is good to know that the SIAM model as such does not create an agreement between the vendors. Sometimes, the vendors sign a letter-of-intent or similar paper to execute in a fruitful way to ensure the success of the SIAM business case. However, if conflicts happen, such a paper is pretty lightweight. Therefore, proactive actions to prevent conflicts from happening shall be taken.
The SIAM model may turn challenging if some of the competing vendors is assigned the SIAM operator. The model cannot be fruitful is some of the vendors feel that the SIAM operator pursues its own interests. The regular meetings for service level management shall be split in two: In the round table discussions, all the key vendors are present, and the agenda shall include the service level review and topics of common interest. The bilateral meetings with the customer and each vendor shall handle problems, disputes, and agreement-related issues specific to that vendor. This structure makes the governance somewhat complex. Therefore, some fine-tuning may be necessary as the time flies.
It is the customer's responsibility to ensure that there is no gaps in the value chain: tasks falling into the responsibility of no service provider. Of course, the vendor responsibilities shall not overlap.
Special attention is needed if the customer wants to transfer the responsibility of a service element from a vendor to another.
It is not only about the contract between the customer and vendor A, but also between the customer and vendor B. Contractually it must be ensured that the transfer takes place effectively in cooperation between the vendors, so that the value chain is not interrupted.