IT suppliers don't want to manage government's multi-sourcing

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The government's plan to break up massive IT outsourcing contracts and have system integrators manage them has taken a major blow as it appears few service providers want to manage these multi-sourcing contracts.

The plan, in what is known as the tower model, was to separate IT components - such as hosting, applications development, security and desktop support and contract different suppliers.
 
One supplier will then take on the role of Service Integration and Management (SIAM) to manage the various suppliers/towers, without holding any of the  contracts itself.

This is part of a trend to create service integrators rather than use system integrators. I have read loads about this particularly as cloud computing becomes more mature. If organisations are using cloud services they will have loads of suppliers and might struggle to manage them.

One of my colleagues recently wrote an article revealing how the government departments that are adopting the model are seeing interest from suppliers, in being the service integrator, diminishing.

The Foreign and Commonwealth Office (FCO) and the Ministry of Justice (MoJ) were adopters of the model and are currently seeking a SIAM provider. However, both have seen a significant drop out in the numbers of suppliers bidding in the first round of the procurement: down from eight to three and four to two, respectively. 

One of the suppliers who dropped out of the running told Computer Weekly that a common issue with the current SIAM model is that suppliers are not allowed to bid for the towers as well as the integrator piece.

For example Capgemini is doing this for Rolls Royce. But the big difference between this and the government's plan is that Capgemini also runs support applications such as Rolls Royce's SAP Enterprise Resource Planning (ERP) and supply chain software systems.

So is the service integrator model, in government, doomed because the supplier sacrifices potentially lucrative work when it becomes service integrator?

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About this Entry

This page contains a single entry by Karl Flinders published on August 16, 2012 2:10 PM.

Why do businesses outsource IT? was the previous entry in this blog.

Mobile integration could be the next big outsourcing push is the next entry in this blog.

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