The struggle to balance single and multi-sourcing decisions is pervasive. Because service engagement decisions are fragmented across the organization and made at the portfolio level—not the enterprise level—companies are constantly at odds. IT is often focused on consolidation, while business functions establish new relationships. This creates a strategic disconnect. We need a new management model that can unify these efforts and optimize our provider ecosystem for maximum business value, rather than just chasing a single-vendor ideal.

The current wind is blowing in the direction of consolidation, but consolidation is a means, not an end. While many organizations are being driven by consolidation, many enterprises approach it as a reactive, cost-cutting measure. The true challenge isn’t just reducing the number of partners, but rather establishing a strategic framework that informs these decisions. In one case, a Forrester client has consolidated more than a dozen active GSI engagements into a single-uber-relationship with a single service provider.  While this simplified their portfolio, it also led to a significant pitfall: they were pressured into an engagement that was logical on paper but not the best fit in context. This “single-uber-relationship” is unusual. GSIs are pursuing consolidation opportunities as a discrete category of service, but a single partner left standing is a risky goal. We discuss the dynamics of this shift in the recent report Stop Struggling With Single Vs. Multiple Service Provider Decisions.

Expanding AI Ecosystem Requires A New Approach To Service Integration

A big change is coming. While the goal may be to consolidate, the reality is that a multi-provider ecosystem is here to stay. Multiple players are part of the expanding AI ecosystem, including global system integrators, hyperscalers, resellers and telcos, but also non-traditional players such as model builders and chipmakers. The challenges are integration and coordination. The process to create a more streamlined, effective, and strategically aligned partner ecosystem is the best outcome and not consolidation as the end goal some of these players may play a highly critical role in solutioning, but perhaps only for limited periods of time.  The introduction of new types of entities like model builders also raises the question of familiarity – how will they behave as commercial partners?

This brings us to a discussion about service integration and management, traditionally referred to as SIAM. SIAM has been used primarily as a means to knit different service “towers,” together using mechanisms like the operating level agreement from ITIL. Numerous suppliers, including Accenture, Capgemini, Deloitte, HCLTech, Kyndryl and Scopism, are working on reinvigorating SIAM to fit the emerging requirements, instead of getting mired in the operational “incident, problem, change.” loop, to using SIAM as a way to pursue business advantage by informing service provider engagement decisions. It will not be easy to make this shift on an industry-wide basis, but forward-thinking enterprises can use it as a means to enforce simplification in enterprise portfolios and support business priorities through optimal partner selection.

SIAM is sometimes derided by ITIL skeptics, who are prepared to throw out the SIAM baby with the ITIL bathwater. They have a point given SIAM’s mixed record as a commercial proposition. But the new agentic AI ecosystem will require a new approach to service integration, as well as making explicit preconditions and qualifications for participation. The advent of agentic AI is also likely to accelerate the shift from horizontal to more vertical outsourcing models, in which case multiple GSIs are likely to coexist as suppliers of agentic solutions, less so of horizontal services like applications management. If you are a Forrester client, set up a guidance session with me to help your organization address this shift.