ABSTRACT Research into outsourcing has attempted to help managers achieve greater success with ou... more ABSTRACT Research into outsourcing has attempted to help managers achieve greater success with outsourcing; however, along with mixed success has come mixed advice. Numerous studies propose a wide range of recipes for success, but problems continue, seemingly unabated. In particular, despite over a decade of research into IT outsourcing (ITO), no comprehensive models of ITO processes, structures, or success have emerged. This research attempts to achieve a degree of unification, of what is presently a fragmented literature, by developing and testing three frameworks designed assist research and management with decision-making. Those three frameworks are as follows: (1) a process framework for ITO consisting of a four-phase “Outsourcing Lifecycle” with 54 key activities, (2) a taxonomic framework, “Configuration”, for classifying different ITO structures, comprised of seven structural attributes with 27 high-level options at both the deal (individual outsourcing arrangement) and portfolio (organizational) level, and (3) a conceptual framework for measuring ITO success, with 25 goals/outcomes grouped into three categories of financial, operational, and strategic. These three frameworks were developed through careful analysis of 100 outsourcing cases from 1994 to 2003, three ITO surveys conducted in Australia during 1994 to 2001, and the literature. To explore their validity and usefulness, the frameworks were tested during 2003 and 2004 via in-depth interviews in seven large Australian organizations. The findings add further weight to the conclusions from the original 100 cases, surveys, and the prior literature: the three frameworks are important for understanding, comparing, and managing ITO arrangements. Building on these three frameworks, the primary contribution of this thesis is its demonstration that outsourcing is more about complex choices than has ever been recognized in the prior literature. Organizations contemplating outsourcing face an inestimable number of choices. The fundamental proposition of this thesis is that when guided on what choices must be made, the rationale behind the choices, and the potential issues each choice creates, management can make better decisions to achieve their desired objectives. The implication for management of this insight is that if made and managed appropriately, sound choices will enable firms to manage the extremely strong forces of organizational self-interest and help deliver benefits that outsourcing can be capable of delivering. The implication for researchers is that prior studies may have yielded inconsistent and incomplete results because researchers failed to recognize the different choices that firms face, and their importance, in fully understanding ITO.
The paper complements earlier reviews by further examining thirteen years of academic IT sourcing... more The paper complements earlier reviews by further examining thirteen years of academic IT sourcing studies. It finds them rich with much empirical survey and case research findings, but still marked by inconsistencies, a plethora of concepts, research approaches, ambivalent terminology, and a lack of consistency and common focus across different research groupings. It then looks at a limited set of internally consistent research studies carried out by the authors to come to more positive conclusions about how in detail, organizations have moved up the IT sourcing learning curve. This learning is classified under four headings: assessment of the back-office portfolio; evaluation of market options; the crafting of outsourcing arrangements and the
Contents: Foreword Preface Introduction The quadrants of the contract scorecard The steps in deve... more Contents: Foreword Preface Introduction The quadrants of the contract scorecard The steps in developing KPIs Schemes for the consequences of KPI performance Planning the contract scorecard The quality specification a " the service level agreement (SLA) The financial specification a " the financial schedule The relationship specification a " the governance charter The strategic specification a " unique contract schedules Conclusion References Index.
Studies have emphasised the importance of a strong relationship between a client and vendor to en... more Studies have emphasised the importance of a strong relationship between a client and vendor to ensure positive IT Outsourcing (ITO) outcomes. To measure and assess this relationship strength, a construct known as Relationship Quality (ReQ) has been widely used in the ITO context. However, recent studies have highlighted the inconsistent and even contradictory application of this construct in previous studies raising concern over its validity. To address this matter, we conducted a critical literature analysis to systematically examine how ReQ has been applied in previous ITO studies. The findings from our review highlight three important knowledge gaps with the current ITO studies: 1) lack of rich qualitative studies investigating ReQ that is complex and subjective in nature; 2) inappropriate application of economic and strategic based theoretical lenses; 3) lack of differentiation between ReQ attributes. This study provides a number of recommendations to enhance the application and measurement of ReQ in future ITO studies. The next step of the study will address the three identified knowledge gaps. This study offers important implications to both theory and practice.
The paper tests whether what appears to be a strong general theory of why organizations choose to... more The paper tests whether what appears to be a strong general theory of why organizations choose to acquire goods and services through contracting rather than in-house service provision, namely Domberger’s theory of the Contracting Organization, applies in an IT context. The validity of that theory is tested using data from a survey of 235 senior IT managers. The paper concludes that, in a field still searching for appropriate theory, Domberger’s work does indeed provide a very useful lens for understanding IT outsourcing. His four types of benefit of contracting—specialization, market discipline, flexibility, and cost saving—emerge as a concise summary of senior IT managers ’ explanations of why their organizations chose to outsource IT. The paper also tests Domberger’s theory against IT outsourcing outcomes, and further develops a model of organizational satisfaction with IT outsourcing based on Domberger’s four factors. Three hold up, but cost savings were not important in explaini...
All IT outsourcing (ITO) deals are different. If researchers are to produce meaningful advice on ... more All IT outsourcing (ITO) deals are different. If researchers are to produce meaningful advice on how to manage outsourcing, we need better to ways to describe and classify ITO arrangements. In this paper, we introduce a new concept “configuration”, defined as a highlevel description of the set of choices the organization has made in crafting its ITO portfolio and deals therein. Further, we tentatively identify seven attributes—Scope Grouping, Supplier Grouping, Financial Scale, Duration, Pricing Framework, Resource Ownership, and Commercial Relationship—as key descriptors of an organization’s outsourcing configuration. The contribution of this paper is its articulation of the concept of an organization’s ITO configuration, the identification of the seven key attributes, and demonstration that configuration is an important concept for understanding, comparing and distinguishing ITO arrangements.
Outsourcing, whether of IT or business processes, onshore or offshore, continues to raise expecta... more Outsourcing, whether of IT or business processes, onshore or offshore, continues to raise expectations and pose challenges for private and public sector organizations alike. Time and again, we found even experienced organizations running into massive problems, suffering from slow organizational learning, and working in a reactive rather than an anticipatory mode. 2 The results are troubling. Here are some recent examples: • In 2000, UK retailer Sainsbury signed a 7-year US$3.25B deal with Accenture to outsource its IT operations. By late 2004, the deal had been rene-1 Cynthia Beath was the accepting Senior Editor for this article.
As organisations move towards greater levels of contracting and become more dependent on third pa... more As organisations move towards greater levels of contracting and become more dependent on third parties, contract management becomes a core activity. It can't be left for people to do in addition to their 'real job'.
An investment in contract management is the only way a contract's benefits can truly be realised and its risks managed. Merely signing a contract isn't sufficient for any commercial deal of importance (whether that be due to value or risk).
This paper explains the 12 best practices in contract management that yield results.
List of Figures List of Tables Acknowledgements Series Preface About the Authors Introduction: St... more List of Figures List of Tables Acknowledgements Series Preface About the Authors Introduction: Still on the Learning Curve Foundations Moving to the Strategic Agenda Building the Relationship Advantage Selecting and Leveraging Suppliers Keeping Control Through Core Retained Capabilities Collaborating to Innovate - The Next Phase Key Practices The Governance Charter - Overseeing the Outsourcing Arrangement Contract Management Strategy The Contract Scorecard: Design and Measurement Disengagement: Preparing for the Next Generation Outsourcing into the Future Conclusion: Steering a Course Index
Information technology outsourcing (ITO) research as a genre is presently in a relatively youthfu... more Information technology outsourcing (ITO) research as a genre is presently in a relatively youthful state since it began last decade. As yet, there is no consistently adopted definition of what ITO is and little agreement over what forms it takes. This paper takes the concept of ITO configuration, the structural taxonomy of outsourcing arrangements, as a lens to examine major ITO contracts in seven large organizations. The study contributes insights gained from seven cases to better understand the complexity of the phenomenom and assist organizations in forming and managing their ITO arrangements. The primary contribution of this paper is its demonstration that outsourcing is more about complex choices than has ever been recognized in the prior literature, and that the configuration structures adopted offer explanations and insight into success and failure depending upon how the chose configuration was managed by the client organization.
ABSTRACT Research into outsourcing has attempted to help managers achieve greater success with ou... more ABSTRACT Research into outsourcing has attempted to help managers achieve greater success with outsourcing; however, along with mixed success has come mixed advice. Numerous studies propose a wide range of recipes for success, but problems continue, seemingly unabated. In particular, despite over a decade of research into IT outsourcing (ITO), no comprehensive models of ITO processes, structures, or success have emerged. This research attempts to achieve a degree of unification, of what is presently a fragmented literature, by developing and testing three frameworks designed assist research and management with decision-making. Those three frameworks are as follows: (1) a process framework for ITO consisting of a four-phase “Outsourcing Lifecycle” with 54 key activities, (2) a taxonomic framework, “Configuration”, for classifying different ITO structures, comprised of seven structural attributes with 27 high-level options at both the deal (individual outsourcing arrangement) and portfolio (organizational) level, and (3) a conceptual framework for measuring ITO success, with 25 goals/outcomes grouped into three categories of financial, operational, and strategic. These three frameworks were developed through careful analysis of 100 outsourcing cases from 1994 to 2003, three ITO surveys conducted in Australia during 1994 to 2001, and the literature. To explore their validity and usefulness, the frameworks were tested during 2003 and 2004 via in-depth interviews in seven large Australian organizations. The findings add further weight to the conclusions from the original 100 cases, surveys, and the prior literature: the three frameworks are important for understanding, comparing, and managing ITO arrangements. Building on these three frameworks, the primary contribution of this thesis is its demonstration that outsourcing is more about complex choices than has ever been recognized in the prior literature. Organizations contemplating outsourcing face an inestimable number of choices. The fundamental proposition of this thesis is that when guided on what choices must be made, the rationale behind the choices, and the potential issues each choice creates, management can make better decisions to achieve their desired objectives. The implication for management of this insight is that if made and managed appropriately, sound choices will enable firms to manage the extremely strong forces of organizational self-interest and help deliver benefits that outsourcing can be capable of delivering. The implication for researchers is that prior studies may have yielded inconsistent and incomplete results because researchers failed to recognize the different choices that firms face, and their importance, in fully understanding ITO.
The paper complements earlier reviews by further examining thirteen years of academic IT sourcing... more The paper complements earlier reviews by further examining thirteen years of academic IT sourcing studies. It finds them rich with much empirical survey and case research findings, but still marked by inconsistencies, a plethora of concepts, research approaches, ambivalent terminology, and a lack of consistency and common focus across different research groupings. It then looks at a limited set of internally consistent research studies carried out by the authors to come to more positive conclusions about how in detail, organizations have moved up the IT sourcing learning curve. This learning is classified under four headings: assessment of the back-office portfolio; evaluation of market options; the crafting of outsourcing arrangements and the
Contents: Foreword Preface Introduction The quadrants of the contract scorecard The steps in deve... more Contents: Foreword Preface Introduction The quadrants of the contract scorecard The steps in developing KPIs Schemes for the consequences of KPI performance Planning the contract scorecard The quality specification a " the service level agreement (SLA) The financial specification a " the financial schedule The relationship specification a " the governance charter The strategic specification a " unique contract schedules Conclusion References Index.
Studies have emphasised the importance of a strong relationship between a client and vendor to en... more Studies have emphasised the importance of a strong relationship between a client and vendor to ensure positive IT Outsourcing (ITO) outcomes. To measure and assess this relationship strength, a construct known as Relationship Quality (ReQ) has been widely used in the ITO context. However, recent studies have highlighted the inconsistent and even contradictory application of this construct in previous studies raising concern over its validity. To address this matter, we conducted a critical literature analysis to systematically examine how ReQ has been applied in previous ITO studies. The findings from our review highlight three important knowledge gaps with the current ITO studies: 1) lack of rich qualitative studies investigating ReQ that is complex and subjective in nature; 2) inappropriate application of economic and strategic based theoretical lenses; 3) lack of differentiation between ReQ attributes. This study provides a number of recommendations to enhance the application and measurement of ReQ in future ITO studies. The next step of the study will address the three identified knowledge gaps. This study offers important implications to both theory and practice.
The paper tests whether what appears to be a strong general theory of why organizations choose to... more The paper tests whether what appears to be a strong general theory of why organizations choose to acquire goods and services through contracting rather than in-house service provision, namely Domberger’s theory of the Contracting Organization, applies in an IT context. The validity of that theory is tested using data from a survey of 235 senior IT managers. The paper concludes that, in a field still searching for appropriate theory, Domberger’s work does indeed provide a very useful lens for understanding IT outsourcing. His four types of benefit of contracting—specialization, market discipline, flexibility, and cost saving—emerge as a concise summary of senior IT managers ’ explanations of why their organizations chose to outsource IT. The paper also tests Domberger’s theory against IT outsourcing outcomes, and further develops a model of organizational satisfaction with IT outsourcing based on Domberger’s four factors. Three hold up, but cost savings were not important in explaini...
All IT outsourcing (ITO) deals are different. If researchers are to produce meaningful advice on ... more All IT outsourcing (ITO) deals are different. If researchers are to produce meaningful advice on how to manage outsourcing, we need better to ways to describe and classify ITO arrangements. In this paper, we introduce a new concept “configuration”, defined as a highlevel description of the set of choices the organization has made in crafting its ITO portfolio and deals therein. Further, we tentatively identify seven attributes—Scope Grouping, Supplier Grouping, Financial Scale, Duration, Pricing Framework, Resource Ownership, and Commercial Relationship—as key descriptors of an organization’s outsourcing configuration. The contribution of this paper is its articulation of the concept of an organization’s ITO configuration, the identification of the seven key attributes, and demonstration that configuration is an important concept for understanding, comparing and distinguishing ITO arrangements.
Outsourcing, whether of IT or business processes, onshore or offshore, continues to raise expecta... more Outsourcing, whether of IT or business processes, onshore or offshore, continues to raise expectations and pose challenges for private and public sector organizations alike. Time and again, we found even experienced organizations running into massive problems, suffering from slow organizational learning, and working in a reactive rather than an anticipatory mode. 2 The results are troubling. Here are some recent examples: • In 2000, UK retailer Sainsbury signed a 7-year US$3.25B deal with Accenture to outsource its IT operations. By late 2004, the deal had been rene-1 Cynthia Beath was the accepting Senior Editor for this article.
As organisations move towards greater levels of contracting and become more dependent on third pa... more As organisations move towards greater levels of contracting and become more dependent on third parties, contract management becomes a core activity. It can't be left for people to do in addition to their 'real job'.
An investment in contract management is the only way a contract's benefits can truly be realised and its risks managed. Merely signing a contract isn't sufficient for any commercial deal of importance (whether that be due to value or risk).
This paper explains the 12 best practices in contract management that yield results.
List of Figures List of Tables Acknowledgements Series Preface About the Authors Introduction: St... more List of Figures List of Tables Acknowledgements Series Preface About the Authors Introduction: Still on the Learning Curve Foundations Moving to the Strategic Agenda Building the Relationship Advantage Selecting and Leveraging Suppliers Keeping Control Through Core Retained Capabilities Collaborating to Innovate - The Next Phase Key Practices The Governance Charter - Overseeing the Outsourcing Arrangement Contract Management Strategy The Contract Scorecard: Design and Measurement Disengagement: Preparing for the Next Generation Outsourcing into the Future Conclusion: Steering a Course Index
Information technology outsourcing (ITO) research as a genre is presently in a relatively youthfu... more Information technology outsourcing (ITO) research as a genre is presently in a relatively youthful state since it began last decade. As yet, there is no consistently adopted definition of what ITO is and little agreement over what forms it takes. This paper takes the concept of ITO configuration, the structural taxonomy of outsourcing arrangements, as a lens to examine major ITO contracts in seven large organizations. The study contributes insights gained from seven cases to better understand the complexity of the phenomenom and assist organizations in forming and managing their ITO arrangements. The primary contribution of this paper is its demonstration that outsourcing is more about complex choices than has ever been recognized in the prior literature, and that the configuration structures adopted offer explanations and insight into success and failure depending upon how the chose configuration was managed by the client organization.
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An investment in contract management is the only way a contract's benefits can truly be realised and its risks managed. Merely signing a contract isn't sufficient for any commercial deal of importance (whether that be due to value or risk).
This paper explains the 12 best practices in contract management that yield results.
An investment in contract management is the only way a contract's benefits can truly be realised and its risks managed. Merely signing a contract isn't sufficient for any commercial deal of importance (whether that be due to value or risk).
This paper explains the 12 best practices in contract management that yield results.