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How to plan for disaggregation – the next step in the evolution of IT outsourcing

from  December 9, 2021 | 4 min read

In case “disaggregation” is a foreign concept, we’ll take a moment to set the scene.

As the operating environments become ever more complex and more and more organizations seek to rationalize and consolidate suppliers, new challenges have begun to emerge. Outsourcing – especially in key back-office areas like IT services – is a logical strategic decision for many – as seen by the rapid adoption of Cloud platforms in the past five years.

But with high profile collapses and problems plaguing major outsourcers, procurement departments and decision makers are faced with a complex choice – whether to source their services from one provider, or from many.

In the UK, the government has led the way in innovating outsourcing by placing caps on IT contracts in order to make the public sector more “SME friendly.”

This approach, called “service disaggregation”, can help to prevent an organization outsourcing all of its IT eggs to a single basket. Realigning technology products and services to the needs of specific organizations and teams, and creating a hedge against the risk of embarrassing public IT outsourcing disasters.

Disaggregating – coming soon to a business near you

Although disaggregation began in the public sector, it’s rapidly moving into the private sector. In the UK, many private sector tenders have been seen to follow the government’s “Service Integration and Management” (SIAM) model. This model not only represents a radical departure from traditional approaches to outsourcing, it creates a rational blueprint for outsourcing that works well for the needs of many large organizations looking for a level of expertise, customization, and scalability that simply can’t be delivered by a traditional IT monolith.

Paving the way for disaggregation in your own organization

The disaggregated model has clear advantages – particularly those with highly specific requirements. But this doesn’t mean implementing it is simple. With that in mind, here are 4 things you’ll need to consider before you set out.

1. Decide whether it’s the right approach for you.

Although disaggregating can be a rational approach for larger companies, this may not be so for the mid-market. The SIAM model requires a lot of internal investment in change management, and carries a larger overhead in terms of the expertise required to manage multiple suppliers and integrate services successfully. Without the right systems for monitoring service delivery and maintaining relationships, the disaggregated approach risks different organizations passing blame between each other and competing to deliver services if their remits aren’t clearly defined. The resulting overhead from these issues can present a huge administrative headache – and a huge source of hidden costs.

Aggregated services aren’t right for everyone – but they’re not something to be avoided at all costs. It’s vital to determine which approach is right for your business before you commit.

2. Take stock of your own capability

As you begin a disaggregation project, treat it like any change management effort. Agree roles and responsibilities and ensure internal stakeholders and providers are held accountable for them. In the context of the points raised above, this means assigning an internal team to manage the policies, processes, and expectations your vendors will be expected to adhere to, and to monitor day-to-day operations and regular check ins to ensure service levels are met and innovation is possible.

3. Keep an eye on potential innovations

While it may be intuitively obvious that relying on a single provider can stifle innovation and smaller, specialist providers are more likely to challenge your organization on their areas of expertise, the complexity of “lights on” operations in a disaggregated model can themselves present an innovation barrier. The key is ensuring that each service provider’s contribution maps clearly to your business goals, and that facilitating these goals leads naturally to opportunities to deploy innovations across your IT ecosystem.

4. Take advantage of your technical leaders

Your CIO’s organization is now a key component of organizational change – and as a result, your CIO is the board member most likely to know where your IT capabilities don’t quite match up to the ambition of the business. They must therefore be allowed to become the leaders of innovation and transformation your business needs to thrive whether aggregated or disaggregated. Your organization’s culture must be steered towards a better understanding of the importance of digital transformation. And your organization’s technical leadership must be positioned to both articulate the advantages of the choices you make to the business, and guide the whole organization through the process to create the best possible outcome.

How can Unit4 help you?

Unit4 have been working with people centric organizations across the public and private sectors for over 40 years, and create infinitely customizable enterprise software designed to fit your needs and put your users in the driving seat. To discover more about our ERP, FP&A, and HCM solutions, visit our dedicated product pages – or if you’d like to see what we can do for yourself, click here to arrange a demo.

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