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.
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.
How much should an IT leader expect to pay for third-party multi-sourcing integration services?
We've seen the multi-sourcing service integration as a self-funded component of the deal structure; some clients make self-funding a requirement.
When we started developing this approach, we assumed that it would require a client to invest more money and that the benefits would eventually offset the added costs. The multi-sourcing integration layer uncovers more than just labor arbitrage savings; it's designed to rationalize out inefficiencies in process, revealing a second layer of savings as great or greater than the first. So the overhead and increased investment on process and tools are usually offset by delivery cost reductions.
In addition, the segmented delivery structure increases competition by expanding the service component provider market to Tier 2 providers. And the contractual flexibility built into the plug-and-play deal structure encourages a focus on competitive market rates through the contract term.
You helped the state of Texas develop its new multi-sourcing service integration model. Why did they take a chance on this unproven, emerging model?