Explaining Multisourcing Decisions in Application Outsourcing

Multisourcing—the delegation of interdependent tasks to multiple vendors—is receiving increasing attention in practice and in research. Yet, we know little about the circumstances under which organizations choose multisourcing. In this paper, we draw on incomplete contracting theory and the knowledge-based view to explain multisourcing decisions in application projects. We test our model using a comprehensive dataset of 1093 sourcing decisions made by Swiss public organizations. The results provide strong support for the model. We find that clients choose multisourcing more frequently when (1) the project is large, (2) the software is client-specific and the project is large enough, (3) client and vendor lack joint experience, (4) the client seeks knowledge, (5) the technology is not proprietary, and (6) the client is experienced in outsourcing. While these findings support common views that clients choose multisourcing in response to opportunistic threats and to knowledge needs, the findings also shed light on prerequisites for multisourcing

Impact of IT Multisourcing on vendor opportunistic behaviour - A research framework

IT Multisourcing (ITM), the provision of IT services by multiple interdependent vendors to a single client, is widely prevalent now. ITM, in principle, is believed to mitigate both strategic and operational risks of IT outsourcing for client organizations. Yet an in-depth inquiry into the association of ITM with these risks is largely missing in literature. There is limited research which systematically investigates the effects of ITM on different forms of risk. This paper develops a theoretical framework to understand the implications of ITM for the specific risk of vendor opportunistic behaviour, also termed ‘strategic risks’ of outsourcing. The fundamental attributes of ITM are identified and mechanisms through which they influence vendor opportunistic behaviour are explained. The advantages and limitations of the framework are discussed and future research directions are laid out

An Approach for Portfolio Selection in Multi-Vendor IT Outsourcing

Companies increasingly extend their outsourcing strategies from single-sourcing to multisourcing combining best-of-breed vendors. This paper includes an analytical model to evaluate a company’s multisourcing strategy. The model can be applied for decision support to answer the questions, how many and which outsourcing vendors to integrate in the implementation of an IT project. We identify an optimal vendor portfolio considering monetary benefits and risk diversification as well as transaction costs arising from the integration and coordination of outsourcing vendors. Based upon a simulation, we find that it makes good economic sense to include a risk evaluation into the multisourcing decision process even if it is subject to misestimation. Therewith, companies are able to avoid unnecessary high risk and consequently a possible high damage. Furthermore, we find that it is better to be too cautious in risk assessment than to be too negligent

Bilateral, Collective, or Both? Formal Governance and Performance in Multisourcing

While multisourcing offers benefits such as access to best-of-breed resources and enhanced competition, it also presents clients with a new governance challenge, namely the need to ensure that vendors not only deliver their individual contributions but also collaborate to produce a coherent joint outcome. Clients can address this challenge by combining bilateral governance focused on each vendor’s individual performance with collective governance aimed at the vendors’ joint performance. However, it is unclear how the simultaneous application of bilateral and collective governance affects multisourcing performance. Indeed, the literature falls short in systematically differentiating these governance mechanisms and empirically examining their interplay. Drawing on existing work on multisourcing and on the outsourcing governance literature, we argue that bilateral and collective governance direct efforts toward different performance dimensions (individual vs. joint), invoke different metaphors (market vs. team), and promote conflicting norms (competitive vs. cooperative), which can result in trade-offs when bilateral and collective governance mechanisms are combined. Results from a survey of 189 multisourcing arrangements support our expectation that bilateral and collective governance promote different performance dimensions. Notably, one collective governance mechanism, conflict management procedures, contributes to both individual and joint performance. We find substitutional effects between bilateral and collective governance in relation to joint performance but not individual performance, indicating that the benefits of collective governance for joint performance are more easily compromised than the benefits of bilateral governance for individual performance. We also observe complementary effects within collective governance mechanisms. Our key contribution lies in theorizing and empirically examining the effects and interplay of bilateral and collective governance in multisourcing

Bilateral, Collective, or Both? Formal Governance and Performance in Multisourcing

While multisourcing offers benefits such as access to best-of-breed resources and enhanced competition, it also presents clients with a new governance challenge, namely the need to ensure that vendors not only deliver their individual contributions but also collaborate to produce a coherent joint outcome. Clients may address this challenge by combining bilateral governance focused on each vendor’s individual performance with collective governance aimed at the vendors’ joint performance. However, it is unclear how the simultaneous application of bilateral and collective governance affects multisourcing performance. Indeed, the literature falls short in systematically differentiating these governance mechanisms and empirically examining their interplay. Drawing on existing work on multisourcing and on the outsourcing governance literature, we argue that bilateral and collective governance direct efforts towards different performance dimensions (individual vs. joint), invoke different metaphors (market vs. team), and promote conflicting norms (competitive vs. cooperative), which can result in trade-offs when bilateral and collective governance mechanisms are combined. Results from a survey of 189 multisourcing arrangements support our expectation that bilateral and collective governance promote different performance dimensions. Notably, one collective governance mechanism, conflict management procedures, contributes to both individual and joint performance. We find substitutional effects between bilateral and collective governance in relation to joint performance but not individual performance, indicating that the benefits of collective governance for joint performance are more easily compromised than the benefits of bilateral governance for individual performance. We also observe complementary effects within collective governance mechanisms. Our key contribution lies in theorizing and empirically examining the effects and interplay of bilateral and collective governance in multisourcing

How Formal Governance Affects Multisourcing Success: A Multi-level Perspective

Multisourcing has become a common sourcing model in recent outsourcing practice. Yet, the extant and relevant IS literature has so far offered limited insight into how to stipulate both individual (i.e., individual vendor) and joint (the entire vendor network) performance while ensuring governance efficiency. Our study set about addressing this gap by examining how these three dimensions of multisourcing success can be achieved through formal governance. Specifically, we considered bilateral formal control, collective formal control and conflict arbitration (among vendors) as key formal governance elements. Results from a pan-European survey of client firms pursuing multisourcing projects show that bilateral formal control sets the stage to achieve both individual and joint performance, while conflict arbitration strengthens individual performance, and collective formal control strengthens joint performance. Governance efficiency is improved when both collective formal control and conflict arbitration are high. We also found that conflict arbitration strengthens the positive effect of collective formal control on both individual and joint performance. Our findings highlight the importance of governing inter-vendor relationships in multisourcing arrangements as opposed to relying solely on bilateral governance. Our study extends the limited literature on IS multisourcing, and assists managers in considering the strategies they wish to pursue when choosing appropriate governance mechanisms

Comparing IT Supplier Selection Criteria in Single- Versus Multi-Sourcing Constellations: An Empirical Study

Although information technology (IT) outsourcing is widely applied by companies and has been intensively researched, there has been little scientific research on the differences in single- versus multi-sourcing constellations. Furthermore, linear extension of single-sourcing to multi-sourcing is limited, despite the fact that companies utilize multi-sourcing more frequently in recent times. This empirical research aims to increase the understanding of differences in single- versus multi-sourcing constellations based on the relevance of IT supplier selection criteria for application development and maintenance as well as infrastructure services. Based on a literature review, an empirical survey of sourcing professionals was conducted. Combined inferential and descriptive statistical analysis indicates a significant difference of the relevance of various IT supplier selection criteria in single- versus multi-sourcing constellations. The study reveals that criteria related to supplier-risk are more relevant in single-sourcing, while criteria related to price are dominant in multi-sourcing constellations

Perspectives on Digital Sustainability

This habilitation thesis presents perspectives on digital sustainability, a novel concept connecting digitalization with sustainability. It explains why digital artifacts such as software or data have to meet technical characteristics of quality, transparency, semantics and multiple locations in order to serve society in the long term. However, these requirements are just necessary but not sufficient preconditions to consider digital artifacts sustainable. Their associated ecosystem of businesses, governments, and individuals must also meet the legal and organizational characteristics of open license, shared tacit knowledge, participation, good governance, and diversified funding. And, finally, sustainable digital artifacts must lead to ecological, societal and economical benefits. This thesis statement is discussed in the introductory chapter of the habilitation. It connects and summarizes 13 refereed publications clustered in five perspectives on digital sustainability: In the first perspective, the path of defining the concept of digital sustainability is summarized. This part starts with a publication that introduced an initial set of characteristics for digital sustainability (Stuermer, 2014). The following article connects digital sustainability with digital preservation (Stuermer and Abu-Tayeh, 2016). These studies have eventually led to an extended publication in a sustainability journal elaborating the basic conditions of digital sustainability in detail (Stuermer et al., 2017a). The second perspective includes recent publications on open source software (OSS) research scrutinizing how patterns of digital sustainability are applied within the software development industry. One publication analyzes feature requests within the Eclipse OSS community (Heppler et al., 2016). The following article develops a maturity model of Inner Source, a special form of OSS development practices in an organization (Eckert et al., 2017). And one study in a computer science journal addresses different types of OSS governance by comparing independent and joint communities (Eckert et al., 2019). The next perspective focuses on the procurement of information technology (IT) which involves critical topics of knowledge management and governance related to digital sustainability. Analyzing data crawled from the Swiss public procurement platform Simap.ch exposes lock-in effects, outsourcing decisions as well as multisourcing within the software industry. One article in this perspective introduces the methodology and the dataset pointing out the high level of direct awards within the IT sector (Stuermer et al., 2017b). Another publication tests hypotheses on contract choice in regard to knowledge specificity and task scope (Krancher and Stuermer, 2018a). And one study explains multisourcing decisions using a large dataset on public procurement of IT in Switzerland (Krancher and Stuermer, 2018b). The subsequent perspective highlights open data and linked data as another form of sustainable digital artifacts. One publication proposes a framework permitting the measurement of the impact of open data (Stuermer and Dapp, 2016). Another article introduces linked open government data (LOGD), a kind of graph-structured open data stored in different kinds of platforms (Hitz-Gamper et al., 2019). The final perspective extends the phenomenon of open data into the area of governmental services. By linking the concepts of public governance and open government one article shows how transparency and participation are achieved with digital tools (Stuermer and Ritz, 2014). Another publication includes an empirical analysis of the FixMyStreet open government platform in Zurich called “Züri wie neu” using open data and a user survey to identify the motivation of citizens using this digital tool (Abu-Tayeh et al., 2018)