Anticipating and considering customers ’ flexibility demands in is outsourcing relationships

Information systems (IS) outsourcing relationships are determined by uncertainties and changing business environments for both client and vendor over a long-term outsourcing lifecycle. Although IS outsourcing arrangements have been widely researched, little attention has been paid to how changing business circumstances and resulting customer demands can be systematically assessed, considered, and integrated in adapted service offerings. In this paper we argue that flexibility and agility are the key to handle uncertainty in IS outsourcing and to achieve a continuous fit in the outsourcing relationship. However, the later clients and vendors identify changing requirements the more expensive it generally becomes to provide the necessary flexibility in outsourcing arrangements. This paper proposes an assessment instrument for a systematic identification of changing customer demands on a business level and resulting flexibility requirements on an IT level that clients and vendors can utilize to structure their discussions in an early phase of an outsourcing relationship. Based on a thorough literature review and a requirements analysis with qualitative expert interviews, relevant dimensions and parameters of customers’ flexibility requirements are derived. These dimensions are involved in the design of the assessment instrument. Managerial implications and directions for future research, especially on the applicability and evaluation of the instrument are discussed

Systemic, economic, and environmental influences on the sourcing of application services : a comparison of companies in Germany and the United States

This paper examines three different rationales that might influence a company’s decision of whether to outsource particular information systems (IS) functions within a cross-cultural context. The first of these rationales acknowledges the systemic nature of the IS function i.e. that it is critical for various IS sub-functions and components to work together effectively for the overall IS performance. This perspective is new to IS outsourcing literature. We consider whether and how such systemic effects are factored into a decision to outsource IS sub-functions such as applications development and maintenance. In order to examine the importance of this new perspective, we contrast it with two established ones. The first of these assumes the outsourcing decision is based on a rational cost comparison, including production and transaction costs. The second assumes environmental forces frequently influence outsourcing decisions, as reflected in the opinion of influential stakeholders and the level of discretion in decision-making. This study also explores whether the relevance of determinants in IS outsourcing is influenced by cross-cultural dimensions. This is empirically examined using data from companies based in the United States and companies based in Germany. While cost factors and the opinion of external stakeholders are significant determinants of IS outsourcing for both countries, the countries differ significantly in how the systemic impact of an IS function and the systemic views of IS professionals are factored into the sourcing decision. In addition, the impact of outsourcing decision-making discretion was found to differ significantly between countries. These differences support our perspective that cultural dimensions, such as differences between the United States and Germany in the individualism-collectivism rating as well as in the legitimized bargaining power of labor interest groups, exert a moderating impact on a company’s decision to outsource

A Two Stage Investigation of the Determinants of Information Systems Outsourcing

Outsourcing has recently emerged as akey method of managing Information Systems especially since the report about Eastman Kodak and IBM\u27s outsourcing partnership in 1989 (Loh and Venkatraman, 1992a, 1992b). The importance of outsourcing is partially illustrated by the fact that there are myriad conflicting arguments both for and against outsourcing (Chaudhury et al, 1989, 1995; Gantz, 1990; Lacity and Hirschheim, 1993; Nam et al, 1995a, 1995b). Most outsourcing studies have focused on the investigation of the determinants of the decision to outsource by clients. Transaction cost economics (TCE) theory has recently been used in the study of the determinants of outsourcing (Lacity and Hirschheim, 1993; Nam et al, 1995a, 1995b). The theory of transaction cost economics (TCE) was originally formulated to address the make versus buy choice (Anderson and Coughlan, 1987; Erramilli and Rao, 1993) In TCE, Williamson (1989, 1987, 1981, 1979) proposed that firms should insource when they expect opportunistic behavior by the vendors. In particular when clients are locked-in with vendors, vendors\u27 opportunistic behavior will significantly impair the clients\u27 interests. This statement implies that attributes of existing relationships such as opportunism affect the firms\u27 subsequent make-or-buy decision with the incumbent vendors. However, most prior empirical research on TCE has treated each sourcing decision as an independent event (Masten, 1984; Walker and Walker, 1987, 1984) thereby disregarding the prior relationships that affect the subsequent sourcing decisions. Therefore, any outsourcing study must explicitly incorporate the role of prior ties in its analytical framework (Gulati, 1995). In the outsourcing context, it has been reported that very often clients continue their relationships with vendors. Also, many firms have to decide whether they should continue the outsourcing relationships with the vendors or not. Factors that affect continuation of the relationships are different from factors that affect the initial outsourcing behavior because client firms have locked-in relationships with vendors. According to Seabright et al (1992), and Levinthal et al (1988), prior relationships need to be investigated in order to study the subsequent relationships between clients and vendors. This study willfocus on i) the determinants of the outsourcing decisions and ii) the tendency to persist in the locked-in outsourcing relationship. We investigate the factors that determine outsourcing decisions in two stages. In the first stage, both insourcing and outsourcing firms are studied to investigate the determinants of make-or-buy decision. In the second stage, only outsourcing firms are considered in order to study the intention to continue with the relationship. Two dimensions are proposed in order to conceptualize the diverse types of outsourcing between clients and vendors (Nam et al, 1994a, 1994b). The first dimension is the extent of substitution by IS vendors and the second dimension is the strategic impact of IS applications. There are two types of strategic impact of IS applications: differentiation and cost reduction. The first dimension is proposed from the IS vendors\u27 point of view while the second dimension is proposed from the client firms\u27 point of view. Based on these two dimensions, four types of outsourcing relationships are proposed. These four types are support, reliance, alignment, and alliance. The support cell has a low extent of substitution and low strategic impact. This cell corresponds to the traditional IS vendors service. Vendorsare usually restricted to non-core IS activities and the size of contract is small. The reliance cell has a high extent of substitution and low strategic impact. The IBM and Kodak outsourcing example corresponds to this cell. In recent years, the trend ofoutsourcing has moved from the support cell to the reliance cell. The alignment cell has a low extent of substitution and high strategic impact. Examples in this cell are mostly IS consulting types of services. Even though vendors are not significantly involved with client firms\u27 IS operations, IS vendors significantly influence clients\u27 IS operations. The alliance cell has a high extent of substitution and high strategic impact. Outside vendors not only substitute in-house IS operations but also contribute to clients\u27 competitive advantages through provision of important IS functional activities. In the first stage, hypotheses are developed based on transaction and non-transaction cost factors with respect to the two proposed outsourcing dimensions. Threetransaction cost factors are studied as determinants of the two dimensions: asset specificity, uncertainty, potential number of vendors. Four non-transaction cost factors are also investigated. These four non-TCE factors are IT competency, IS influence, heterogeneity of information systems, and decision analysis effort. Multiple regressions are used to test hypotheses in the first stage. In the second stage, hypotheses are proposed based on prior relationships between clients and vendors in order to studythe determinants of the intention to continue with the outsourcing relationships. Prior relationships are represented by the four types of outsourcing relationships based on two dimensions of outsourcing, vendors performance in terms of client satisfaction, vendors\u27 opportunistic behavior and the length of prior relationships. Logistic regression is employed to test hypotheses in the second stage. Questionnaires were developed based on interviews with IS manager and pretested. Following a pretest, 800 questionnaires were sent to senior IS managers in the U.S. A follow-up letter was mailed to those who had not responded after about three weeks. In total 154 usable questionnaires were received representing a response rate of 19.25%. Out of 154, 93 respondedas outsourcing firms and 61 responded as insourcing firms

Information Systems Control: A Review and Framework for Emerging Information Systems Processes

A major stream of information systems (IS) research examines the topic of control, which focuses on attempts to affect employee behavior as a means to achieve organizational objectives. Despite a rich history of IS control research, approximately 90 percent of the publications focus on only three IS processes: managing information systems development, managing IS outsourcing, and managing security. However, the emergence of new IS processes and technologies with distinct control challenges, such as managing enterprise architecture and managing innovation, highlights a need to consider the wider applicability of past control insights. In this paper, we first integrate existing IS control constructs and relationships into a comprehensive IS control model. Second, we apply this model to emerging IS processes to guide future research and practice. We review 65 influential IS control-related journal papers and identify five control dimensions. We then consolidate these dimensions into a single, integrated model to apply past IS control findings to the challenges of emerging information systems by posing a series of related propositions. With this paper, we position current IS control research to be increasingly applicable and relevant to tomorrow’s emerging IS opportunities and challenges

Examining client perceptions of partnership quality and its dimensions in an IT outsourcing relationship

This paper reports on an empirical study of the multidimensionality of partnership quality in IT outsourcing arrangements and the relationships between these dimensions of partnership quality. A two-phase national survey was conducted to collect empirical data to confirm the dimensions of partnership quality in an IT outsourcing arrangement from the client organisation perspective and to identify the significant relationships between these dimensions using a second generation multivariate analysis technique—partial least squares (PLS). The findings from results of the data analyses show that inter-organisational trust, shared business understanding and to a lesser extent, functional and dysfunctional conflict between the client organisation and the outsourcing vendor in an IT outsourcing relationship are the key determinants of partnership quality. The key outcome variable for high partnership quality between the client organisation and the outsourcing vendor in an IT outsourcing relationship is mutual beneficial sharing of risks and benefits. Commitment in an IT outsourcing relationship is confirmed as a multidimensional construct of behaviour commitment and temporal/continuance commitment and was found to be influenced by the other dimensions of partnership quality. The key findings of this study provide support for the notion that trust and shared business understanding are key drivers in the IT outsourcing partnership style relationship ensuring that the sharing of risks and benefits are realised and conflict is minimised leading to a high quality and ultimately successful partnership between the client organisation and the outsourcing vendor. Furthermore our findings indicate that behavioural commitment to the contractual obligations of an IT outsourcing relationship sustains an ongoing temporal commitment to the partnership between the client organisation and the outsourcing vendor

Development of Measures to Assess Dimensions of IS Operation Transactions

Information Systems (IS) researchers often rely on organizational economics models to describe and explain various IS management issues. While those models are found to be useful, measures are yet to be proposed to assess the dimensions of IS transactions. In this paper, we present the results of a study that was a first effort toward this end. The focus of the study was on one type of transaction, IS operations, in a particular management context, that of outsouring. Measures were developed for four critical dimensions of IS operation transactions: asset specificity, measurement problem, origin of the most important investment, and governance mechanism. Data from 250 large Canadian firms were used to assess the measures, using the Partial Least Squares (PLS) technique. L'économie des organisations est souvent mise à contribution par les chercheurs en systèmes d'information (SI). Peu de travaux ont cependant proposé des instruments de mesure des dimensions transactionnelles des opérations de SI. Ce mémoire marque un pas dans cette direction. Nous proposons des instruments de mesure utiles à l'analyse de l'impartition des opérations informatiques. Quatre dimensions importantes des transactions informatiques retiennent notre attention : la spécificité des actifs, les problèmes de mesure, l'origine des investissements les plus importants et le mode de régie des transactions. Une analyse de moindres carrés partiels (Partial Least Squares) est effectuée à l'aide de données provenant de 250 grandes entreprises canadiennes.Organizational economics; Outsourcing, Économie des organisations ; Impartition ; Sous-traitance

Determinants of the outcomes of services outsourcing: an empirical study of transport services.

The purpose of our study is to examine whether the design and management of the interfaces and interaction processes between customer and provider in services outsourcing are determinants of the results achieved by the outsourcing company. Following the conceptual framework initiated in the study by Wynstra et al. [11], this study focuses on transport services and hypothesized relationships are tested using the Partial Least Squares (PLS) statistical technique. The primary data used was obtained from a survey in three different countries (Germany, Japan and Spain), and from manufacturing companies in the electronics, automotive and machinery sectors. Among other things, the results show that both the structural dimensions of interaction (the organization's resources that it must commit) and the process dimensions of interaction (that consider the dynamic nature of the relationships), are important for obtaining adequate performance from transport services outsourcing.Spanish National Program of Industrial Design and Production DPI 2009 11148PAIDI Excellence Projects P08-SEJ0384

An exploratory study of enterprise architecture practices in Malaysia

This study was an exploratory investigation of the practice of the enterprise architecture (EA) in private and public enterprises in Malaysia. The Zachman Framework was used to evaluate the practice of EA in these enterprises. Ten enterprises from public and private sector participated in the study. Multiple sources including interviews, documents and survey were used as the data sources of the study. The findings presented in this paper were exploratory in our attempt to gain an insight of the EA practices in Malaysia. The paper would give the general outlook of the current practices of EA in Malaysian enterprises

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