Advising on the successful implementation of an IT multi-sourcing strategy
Our client is one of the world’s leading insurers and reinsurers. As part of an ongoing business transformation initiative, it identified the need to improve service levels to customers, brokers and underwriters, and to enhance its operational efficiencies. The client recognised the need to engage with specialist third party providers to achieve these objectives, and appointed Kemp Little’s outsourcing team to help implement an IT multi-sourcing strategy that would provide the client with access to these specialist third parties. Kemp Little’s outsourcing team worked with the client at all stages of the project, from the RFP initiation stage, through down-selection and contract negotiations, to contract signature.
As with all multi-sourcing strategies, collaboration between each of the service providers, and service integration and management (SIAM), was critical to the success of the project.
To help ensure collaboration and co-operation between the service providers, we worked with our client to develop and implement a collaboration agreement between each of the providers and the client. This allowed the client to identify the hand-off points between each of the providers (ensuring that responsibility for each of the service interfaces was properly allocated to the right service provider), and enabled the service providers to understand and deal with any interdependencies between them which might affect delivery of their respective service towers and achievement of the related service levels.
We also helped our client put in place mechanisms designed to incentivise collaboration between the service providers, including a ‘gainshare/painshare’ model involving service bonus and credit pools linked to the achievement of end-to-end service levels. These mechanisms have proved to be highly effective in managing the challenges that inevitably arise when implementing a multi-sourcing strategy.
In addition, we advised the client on its options for performance of the SIAM function – the option ultimately chosen was to outsource this function to one of the tower providers. Our team worked with the client to make sure that the contracts contained the mechanisms needed to empower the SIAM provider in its performance of the SIAM function.
The multi-sourcing strategy has proved to be a huge success for the client, delivering improved service levels, innovation, and tens of millions of pounds of efficiencies in the first three years of the five year arrangements.
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Paul O’Hare is the head of sourcing
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