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Your Mission, Should You Choose to Accept It
By Tom Kucharvy
July 31, 2002

The following analysis is a revised version of an article that originally ran in the April 2002 edition of SummitVision.

Our March 2002 SummitVision View From the Summit article, "Hosting Is Dead! Long Live Multisourcing!," showed why "multisourcing" is the future of hosting in the enterprise.
Multisourcing is a combination of professional services, mission-critical support, remote management and hosting services that are offered to customers in any combination they wish — from a relatively standardized hosted offering to a highly customized on-site solution. It is essentially a flexible form of "outtasking," where customers maintain control of their overall IT strategy and key applications, but offload lower value-add, ministerial tasks to suppliers with particular expertise and cost economies.
In whichever venue — and in whichever way — these services are initially offered, they're designed from the ground up for hosting. They allow customers to migrate seamlessly to a hosted infrastructure at any pace they choose: with a single daring leap, after a succession of baby steps (such as where most initial services are delivered at the customer's own site and managed remotely) or not at all. Ideally, the multisourcer — alone or in conjunction with closely aligned partners — will also offer a range of complementary services.
These services may begin with on-site and remote infrastructure-management and managed hosting, then progress through a succession of higher value-added offerings, such as applications hosting, transitional outsourcing and even business-process outsourcing.
Multisourcing Means Multiple Backgrounds
A number of providers from all types of backgrounds — management service providers (MSPs), infrastructure hosts, ASPs, systems integrators (SIs) and outsourcers — are already moving toward multisourcing by making their offerings more flexible, or by adding new capabilities.
Most managed hosting providers and ASPs, for example, now offer remote-management options; and some even certify customers' existing system configurations, rather than insisting on new systems, for the delivery of services. And, if these vendors don't already have all the required capabilities, they can develop them themselves (as is AT&T, for example), license them (Sprint), acquire them or partner for them.
These infrastructure and ASP strategies do indeed allow the providers to deliver relatively flexible managed-hosting and remote-management capabilities. They are a far cry, however, from the type of comprehensive multisourcing value chains that integrate business consulting, systems integration, applications development, on-site and remote systems and applications management, data-center operations, and ongoing training and support skills.
A few companies — specifically global mega-outsourcers IBM Global Services (IGS) and EDS — are actively putting together the range of capabilities required to deliver comprehensive multisourcing services. Although a few global SIs are moving in this direction, few really have the type of data-center-operations capabilities or replicable-management frameworks required to deliver efficient managed solutions. Most acknowledge that such capabilities are not among their core competencies or consistent with their business models. They would prefer to partner to deliver those solutions, rather than develop them themselves.
This is leading to a wide range of bilateral relationships, in which SIs play critical demand-creation, application-development, customization and general-contracting roles. Given the strength of these SIs' capabilities and client relationships, hosting and MSPs are falling over each other to partner with integrators.
This gives SIs a choice of partners. They are capitalizing by forming relationships with systems vendors, application vendors, capacity service providers (CSPs), ASPs, MSPs and many others to deliver more comprehensive offerings. Although most of these relationships are relatively ad hoc "clean handshake" deals, some — such as Accenture's work with Hewlett-Packard (HP), EDS's alliance with Sun Microsystems, and Cap Gemini Ernst & Young's relationships with Genuity and Corio — really seem to have some teeth. These agreements often have defined customer-engagement models; explicit integration points; and, in some instances, even integrated methodologies.
Good Start Up to a Point
These relationships are nice starts. Yet even the most defined and secure of today's relationships are relative point solutions — one company partnering with another to deliver a specific type of solution to a group of customers. They may be suitable for relatively straightforward, local engagements. Unfortunately, many of today's environments — not to mention tomorrow's Web-services-based ones — are more complex.
Some engagements, for example, require multilateral and continually evolving combinations of providers. They may, for instance, begin with custom development and on-site implementation and management; evolve to remote management; and then develop to a hosted solution. Moreover, large enterprises are increasingly looking for seamless, integrated global rollouts across multiple business units. These corporate clients often have pre-established relations with their own partners, and each business unit within those clients may well have different partners.
Ad hoc, or even closely integrated, bilateral relationships among a relative handful of partners are not sufficient to provide the type of fast, flexible, seamless solutions — or the single-source accountability — that will be required. Even if they are, they will not yield the level of repeatability necessary for delivering cost-efficient implementations with guaranteed high-level service-level agreements (SLAs), or the type of substitutability required to allow one partner to be replaced or supplemented, easily and seamlessly, by another. These flexible, multifaceted, multinational value chains will require predefined integration points and methodologies that are standardized across multiple providers at every level of the value chain.
This will allow an account leader or general contractor — prior to actually performing any work for a customer — to define the set of skills required for a particular engagement and choose among any number of "interchangeable" specialist partners. These partners then can be brought together to provide an ideal solution that is tailored for the needs of a specific application and/or vertical industry, and that is uniform across geographies.
Although the various providers may have never heard of each other before the engagement, their offerings and their work practices will have to mesh seamlessly to create uniform, assured, efficient and repeatable solutions — without the need for costly on-the-job training.
How can such a flexible, multifaceted value chain be put together? More important, how can it be run in a way that each participant will have both an opportunity to make money and an incentive to make the value chain work — rather than trying to extend its own role by cannibalizing partner offerings? And, how will the value chain maintain the flexibility required to adapt to rapidly changing conditions, while simultaneously having the required structure and stability to ensure standardized and cost-efficient interactions between each partner — rather than forcing partners to reinvent the wheel for each engagement?
"Mission Impossible" — An Early Example of Multisourcing
Think back to the classic TV series, "Mission Impossible," where specialized agents with distinct skills were called together — under one team leader — to battle the world's evildoers. In the realm of project management for a multisourcing engagement, a team leader could select among any combination of domain experts, with the assurance that each:

Has achieved a predefined set of skills (such as through a rigid certification program).
Has or can quickly develop components that can seamlessly integrate with those of other partners (as though developing to standard APIs).
Works in accordance with common processes that will allow them to complement other partners' efforts (as through an SI's methodologies), and not overlap them.

But, pulling together a multisourcing value chain has requirements and complexities that Jim Phelps never even dreamed of. Multisourcing team leaders must:

Select among partners of which they have no direct knowledge (such as through a reliable central database based on specific classifications and dependable criteria).
Assess availability and coordinate complex schedules among multiple providers and individuals (such as through an automated scheduling or bidding program).
Compile dynamic teams that can either evolve or be continually reconfigured to accommodate unpredictable customer needs across the entire solution life cycle (such as a single SI can sometimes do).

Although individual vendors or integrators can certainly enforce this type of discipline and standardization among their own people (except, possibly, where the company is managed under a partnership model), it is tougher to see how all of these requirements can come together in an open, multi-vendor, multi-provider model.
As we see it, there are only three types of companies that even come close to having the global reach, technical skills, credibility, demand-creation capabilities and industry influence required to form the foundations of such multisourcing ecosystems:

Major systems and systems-software vendors that want to establish their own infrastructures as standards (e.g., IBM, Sun, HP, Microsoft, Oracle).
Global outsourcers that have an incentive to create a multi-vendor/-provider model, rather than own the entire value chain (especially IGS, HP and, to a lesser extent, EDS).
Global systems integrators (the Big Five, or Four, or Three or however many there will be tomorrow).

Keep the Partners Happy
As I see it, major systems and systems-software vendors will drive the most effective multisourcing ecosystems — just as they have driven the most effective developer and channel programs. The vendors that will be most successful will be those that can develop and sustain synergistic, win-win relationships with all types of partners --independent software vendors (ISVs), ASPs, CSPs, MSPs, SIs and so forth.
The three types of partnerships that will be particularly critical for a vibrant multisourcing ecosystem are those with:

Telcos and other leading CSPs that own the networks and will be huge customers for vendors' platforms. They will play key roles in setting de facto standards, and in delivering cost-effective infrastructure and applications-management and -hosting solutions to small and midsize businesses.
SIs that will be critical in creating demand, developing and customizing applications, selecting and building best-of-breed management and hosting stacks, and managing complex implementations for large enterprise customers.
Some combination of ISVs, ASPs or MSPs that will compete (or possibly cooperate) to provide the applications-management tools required for delivering full, optimized functionality to customers.

Sun, IBM and HP all understand the importance of —and the requirements for - developing powerful ecosystems, and each is moving to do so. Each also has its own unique strengths and weaknesses:
IBM has unique demand-creation capabilities and inimitable customer relationships, strong SI capabilities, a number of key ISV relationships and one of the strongest enterprise-hosting groups in the industry. It lacks critical business-consulting skills, however (although developing these skills is now an IGS priority), and has a history —and, in some cases, a vested interest — in providing too much of the stack itself, rather than in conjunction with partners.
Sun is fully committed to partnering, has a huge number of well positioned partners, has created a well focused Global Systems Integrator program and is extending its industry-leading SunTone program to accommodate all types of partners. The company, however, lacks a solutions-focused sales channel, has limited systems integration and has no outsourcing or hosting capabilities.
HP has a strong history with telcos, a well-conceived program for partnering with select telcos, emerging relationships with key SIs and ISVs, and is demonstrating how a vendor can use its own outsourcing operation to attract and create synergistic bonds among ISVs, SIs and telcos —rather than compete with them. HP, however, has limited industry position; is tangled up in its own all-consuming soap opera surrounding its merger with Compaq Computer; and, as a result, may face one of the most complex corporate integration challenges in history.

Tough Questions
Which of these vendors is best positioned to win, and which could come out of the woodwork as strong competitors? What are the most critical elements of an effective multisourcing ecosystem? Which partners must be incorporated as central players in that ecosystem, and which can be on the fringe — and how can all these partners' capabilities be packaged into win-win-win value propositions?
Most important, what are best practices in each of the elements and how can they be combined into a single killer program that is likely to lead the industry? We at Summit Strategies are spending much of our time and devoting much of our work to these important —and, we hope, not impossible —questions. You'll be hearing more from us on these and other related issues in the coming months.