Prudential regulatory governance of the risks associated with IT multi-sourcing strategies within the Australian banking sector

Concerns about the adequacy of the Australian Prudential Regulatory Authority (APRA) prudential standards to govern the risks associated with the Australian banks’ multi-sourcing IT service delivery strategies provided the motivation for conducting this study. Three research questions were developed to investigate prudential risk management in the banking sector of the Australian Financial Services Industry (AFSI). RQ1: Do the banks employ complex multi-sourcing solutions driven by business unit demands to deliver their IT services? RQ2: What are the risk and governance model/s used by the banks to manage risks associated with their IT services multi-sourcing strategy? RQ3: Is the AFSI IT operational risk exposure adequately covered by the current APRA risk framework and prudential standards? The two largest Australian banks, Commonwealth Bank of Australia (CBA) and Westpac Banking Corporation (WBC) referred to as the ‘banks’ in this research are selected as the sample. CBA and WBC are the first and second largest banks when measured by capitalisation within the banking sector of the AFSI and represent 43 percent sample of the capitalisation value of the AFSI. Although profitable, the banks are under pressure from the market to reduce their cost-to-revenue ratio. One of the main strategies the banks employ to reduce IT costs is the outsourcing the delivery of IT services. Over the past five years a trend has evolved with the banks using offshore-outsourcing to deliver IT services and gain further IT savings. However little empirical research has investigated what impact this trend has had on the risk profile of the banks and the Australian banking sector as a whole. This research identified and investigated the different IT services delivery models adopted by the banks by analysing on the relevant literature and documentation available in the public domain in relation to the AFSI. The findings of this research developed a picture of the IT delivery landscape within the banking sector of the AFSI. Findings of this research also demonstrates the complexity of the banks operational environment which can be attributed to the banks’ introduction of their IT multi-sourcing strategies. Finally the findings of this research raise some questions about whether the risks associated with an increasing reliance on IT multi-sourcing to deliver IT services is adequately managed by Australian banking sector and the regulatory framework of APRA

Diverse virtual social networks: Implications for remote software testing teams

This paper evaluates offshore outsourcing in the IT testing industry and determines what conditions determine its success. There is particular focus on the influence of diversity in teams on group relationships. Two studies are described: the first, investigated the perceptions of professional software testers on the critical factors of offshore outsourcing; and the second study looked at the ability for diverse teams to form close working relationships through virtual networks. We find that overt diversity factors inhibit interaction across nationality boundaries. The limitations of virtual networks for fostering personal communications is apparent in preventing group members from overcoming the initial aversion to mix with out-group members, which could be achieved with closer and more personal communications between members with different diversity factors in normal face to face communications. Where software testing teams are outsourced globaly, and must rely on virtual communications, there seems potential for significant difficulties in developing close working relationships, which on the one hand, can be negative for group cohesion, but one the other hand, can be positive for encouraging imparitality

Successful Management of an Outsourced Large-scale Digitization Newspaper Project

This article uses the case study of the Nevada Digital Newspaper Project (https://nvdnp.wordpress.com/), an extension of the National Digital Newspaper Program (https://www.loc.gov/ndnp/), to introduce proven strategies on how to successfully manage a large-scale digitization project. It provides tips on how to stay within the timeline and deliver products with outstanding quality, leveraging limited human resources, and engaging an external digitization vendor. It discusses practical project management techniques and tools, strategies for establishing collaborative vendor partnerships, and strategies for efficient communication with stakeholders

Virtual Project Management Of Globally Outsourced IT Projects

The existing literature on how globally outsourced information technology (IT) projects are reliant on technology for virtual project management was extended by presenting a new framework for virtual project management and analyzing the current internet-based collaborative tools that facilitate their effectiveness. This assertion derives from an effort to answer the following research question: How are globally outsourced IT projects reliant on technology for virtual project management

The Role Of Risk Management Practices In The Success Of Software Outsourcing From The Perspective Of A Client Firm

Fenomena pembangunan tempah daripada pihak ke tiga dalam bidang Teknologi Maklumat (TM) sedang mengalami tahap kematangan sejak beberapa tahun kebelakangan ini. The Information Technology (IT) outsourcing phenomenon had been maturing in recent years

IS offshoring: a proposed maturity model of offshore IS suppliers

Companies in developed economies are now accustomed to use offshore IS services to develop and maintain software, and an increasing number of specialist offshore services firms exists to meet the demand. These include systems integrators whose origins are in developed economies, and ‘pure play’ offshore IS providers that originate in countries where the cost of IS labour is relatively low. Both type of offshore organisation have changed considerably in recent years in response to market demand and competitive pressure. Although researchers have developed maturity models for users of IS offshoring, there is little that describes the nature and behaviour of offshore IS providers. Accordingly, this paper proposes a maturity model for offshore IS suppliers that is analogous to various consumer-oriented maturity models found in the literature and in trade journals. This preliminary framework is developed by reference to literature on outsourcing, offshoring and IS maturity models, and by recent relevant experience of practitioner organisations. The conclusions from this study can be used to guide further research, and to develop constructs helpful to practitioners. The research helps suppliers of offshore IS services to understand the particular conditions in which it is appropriate to consider new business models. For consumers of offshore outsourcing, it provides a framework for categorising suppliers of IS services

A Conjoint Approach to Understanding IT Application Services Outsourcing

The sourcing of application development is becoming increasingly complex. While much prior work has investigated sourcing in a homogeneous marketplace, sourcing choices have increased in complexity, with a myriad of choices ranging from insourcing to domestic outsourcing to engaging Application Service Providers (ASP) to offshoring . In this study, based upon four organizational theories (Transaction Cost, Resource-Based View, Resource-Dependence View, and the Knowledge-Based View of the Firm), we suggest 10 attributes that firms consider when deciding upon outsourcing of applications. We tested the attributes’ strength by performing conjoint analysis on data collected from 84 IS executives. We constructed profiles, which are combinations of attributes having different levels. Each executive responded to 18 such distinct profiles and selected corresponding outsourcing choices. Our results found that the three most significant drivers of an IT application service choice were cost, risk, and vendor capability. However, the importance of these drivers varied across the different sourcing options. Based upon this, we offer implications for decision-makers and researchers, along with directions for future research

Global Services Sourcing: Issues of Cost and Quality

Global Services Sourcing (GSS) is not an original concept. What is original about it is the media attention it seems to be getting. We have adopted the “then and now” philosophy in developing this report. We start by talking to the pioneers of global services sourcing, companies like General Electric, Nortel Networks and Citibank. The key learning from talking to these companies who have been sourcing their processes for more than a decade is that the long held view - “went for cost, stayed for quality” about moving processes outside the company (in some cases outside the country) is too simplistic. Rather we found that “went for cost and quality, stayed for continued quality at competitive costs” is more in line with the strategy that that these companies employed. Next, our in depth questionnaire tries to capture the “now” of the global services sourcing industry. Since the pioneers had shone the arc light on quality we developed specific quality related questions. The results validated the pioneers’ views: 67% of the respondents said that actual cost savings from services sourcing have been anywhere from 5% - 50% (onshore and/or offshored). 82% of the respondents said that going into the global services sourcing arrangement they look for quality of processes to increase by 2 – 10% (onshore and/or offshored). 70% of the respondents said that the quality of outsourced business processes has increased (quality increase of 5% -10%) or increased significantly (quality increase of 10% - 25%). The top three drivers of outsourcing were: cost savings, increasing capacity, ability to take advantage of offshore labor (through captive centers). The most difficult phase of outsourcing was transition or handoff of business processes from the company to its outsourcing partner. The top risk factors in outsourcing were: loss of institutional knowledge, poor communication with vendor, mismatch of firm cultures. Of the companies that are engaged in services sourcing, 79% of respondents were using an offshore based provider. Perhaps in a sign of maturing of global services sourcing 62% chose to offshore their services to at least one country in addition to India, the current offshoring destination of choice. As far as country risk factors, legal risks (laws comparable to international standards - data security, intellectual property rights) followed by political risks were identified as the top areas of concern. The lesson for countries competing for offshored business and FDI inflows in services is that the robustness and fairness of the legal system is a major factor for companies especially in the face of concerns about loss of institutional knowledge. The overall satisfaction level with outsourcing was high at 68% but a sizeable chunk of respondents – 26% were either unsatisfied or very unsatisfied with their outsourcing arrangements. Almost all of these unsatisfied firms have been outsourcing for 12 months or less, reinforcing the literature about thinking of outsourcing being a long term investment rather than a short term win

A catalog of information systems outsourcing risks

Information systems outsourcing risks are a vital component in the decision and management process associated to the provision of information systems and technology services by a provider to a customer. Although there is a rich literature on information systems outsourcing risks, the accumulated knowledge on this area is fragmented. In view of this situation, an argument is put forward on the usefulness of having a theory that integrates the various constructs related to information systems outsourcing risks. This study aims to contribute towards the synthesis of that theory, by proposing a conceptual framework for interpreting the literature and presenting a catalog of information systems outsourcing risks. The conceptual framework articulates together six key risk elements, namely dangers, negative outcomes, undesirable consequences, factors and mitigation actions. The catalog condenses and categorizes the information systems outsourcing risk elements found on the literature reviewed, both from the perspective of the outsourcing customer and from the perspective of the outsourcing provider. Proposals for subsequent work towards the generation of the theory of information systems outsourcing risk are suggested

Towards a theory of information systems outsourcing risk

Information systems outsourcing risks are a vital component in the decision and management process associated to the provision of information systems and technology services by a provider to a customer. Although there is a rich literature on information systems outsourcing risks, the accumulated knowledge on this area is fragmented. In view of this situation, an argument is put forward on the usefulness of having a theory that integrates the various constructs related to information systems outsourcing risks. This study aims to contribute towards the synthesis of that theory, by proposing a conceptual scheme for interpreting the literature and presenting a preliminary version of a catalog of information systems outsourcing risks. Proposals for subsequent work towards the generation of the theory of information systems outsourcing risk are suggested