The Government has decided that the Service Integration and Management (SIAM) model is the one to pursue for all the current round of departmental ICT refresh projects. Is this the right thing to adapt for other parts of the public sector such as local authorities or the police?
In essence a SIAM model involves the procurement of a prime supplier who takes on the overall responsibility for guaranteeing a set of service outcomes, but is not necessarily the direct deliverer of the various components or ‘towers’ that make up the service.
In isolation, the business case for these models may not be immediately apparent. Constructing a deal which involves multiple procurements and potential for duplicate margins when the alternative is a straightforward appointment of a single supplier that can do everything, is perhaps not the most obvious route to delivering value for your organisation.
Yet this is the preferred strategy for the likes of the Ministry of Justice, Foreign and Commonwealth Office, Department of Health and the DVLA in their ICT re-procurements. Of course, it may not be an entire coincidence that such a doctrine promoted from within the core of the Government emerges during a period of general frustration at the behaviour of some of the larger suppliers, who have established a degree of dominance within the marketplace and in some case have been found to have abused relationships with their public sector clients.
I can however see some other benefits for Central Government in setting up this type of relationship.
Firstly, the basic requirements of ministries tend to be fairly stable, in terms of deal structure. The DVLA for example is fundamentally an administrator of a huge database of vehicle and licence holder information. This is unlikely to change or be integrated with another department’s systems over the course of the next set of major contracts. Contrast this with the potential for council, local health commissioners and the blue light services to merge, integrate or otherwise have their functions redistributed or outsourced in the same period!
The major shift for government ICT is likely to involve moving applications and data into the cloud, generating savings on a unit transaction basis and freeing up server locations and support staff. This in turn allows remaining components to be delivered discretely within an ecosystem governed by generally accepted standards such as ITIL.
Central Government is also likely to remain a large employer of staff, with accompanying needs for consumables and equipment, ongoing austerity notwithstanding. A more dynamic marketplace with low barriers to entry is therefore something to be encouraged and may alleviate some of the more headline grabbing laptop pricing incidents that have occasionally been thrown up by monolithic financial models (albeit one imagines these must have been agreed by their clients at the outset….)
The local public sector is a more complex landscape, especially so at the moment. Integration is being pushed at the organisational level for both back and front office functions. Unlike a national service, the spikes in demand caused by local economic or demographic issues cannot be averaged out. And although many local authorities are transforming their corporate operating model, few have fully achieved a form of current or future stability in requirement that can be articulated effectively across each of the procurements of multiple components of a first time outsourcing.
Nonetheless there is an inherent attractiveness to the idea of democratising the ICT supply chain a little. For example the twin bugbears of helpdesk support and desktop provision could certainly benefit from a discrete treatment. Any action that can remove the frustrations of end users and departmental budget holders at having to endure poor service or apparently high prices for commodity equipment must be worth attempting
Also, for organisations contemplating a merging of service with other public sector partners there could actually be a strong reason to create an individual tower relating to the potentially shared functions, with the management of the transition and subsequent performance of those functions being a role for a SIAM-type organisation acting as a managing agent – meaning the client only has to manage one relationship rather than two..
So there is merit in the concept – unequivocably demonstrating the case whilst developing a procurement commercial strategy for a contract to be signed in 2 years’ time might be a challenge – indeed we think there is a modicum of the Emperor’s new clothes about a wholesale adoption of a model without (as yet) any empirical business case within a sector.
Better perhaps to allow oneself the ability to get the benefits of a SIAM arrangement when the time is right, whilst reducing the initial effort and risk of transition. The key is to shift (the often incumbent) Tier 1 suppliers from their traditional “partnership” mindset of two years of investing then 8 years harvesting, to an approach which involves them receiving reward for delivering transformational outcomes – including overall service savings and end user satisfaction -through a combination of initial process change and subsequent supply chain optimisation.
We think this can be done through careful deal structuring and specification writing. By separating the SIAM and service tower elements into separate specifications, aligning the contractual break clauses around your organisation’s key transformation milestones and bespoking a suite of pricing mechanisms that are more precisely aligned to the outcomes required from each service tower, the contract is likely to remain relevant in the later stages. But at the outset, we would recommend allowing as much freedom as possible for single BPO suppliers or consortia to bid for everything, in order to support the initial transition/transformation. Marrying the two therefore means crafting a deal shape that allows pain-free disengagement of components from the original supplier(s) into a best of breed or commodity provider market as transformation milestones are achieved.
In summary:
We can see why the tower / SIAM model is attractive to central government;
The local public sector has characteristics that are different from central government, so implementing a tower model wholesale may not be as appropriate in all cases, in particular during periods of structural changes to corporate operating models;
Careful crafting of a flexible deal can allow clients to benefit from the simplicity of more traditional models whilst allowing a tower model to be implemented in stages as and when justified.