IT Outsourcing

Businesses, shareholders and all other interested parties (Custom, Tax Administration and Customers) require just in time information regarding profit, price, stock and support. Businesses have responded to those requests with implementation of IT (Information Technology) infrastructure, but implementation of advanced IT system infrastructure has created cost for shareholder and there was immediate need to recruit and to train existing staff. With this step, management focus was oriented in non-strategic processes, and for the implementation and managing of those processes, the management did not have necessary skills, due to this reason many companies in US, Europe and Asia have started to outsource those processes. Regarding process of outsourcing Glassman (2010) concludes, “outsourcing of non-strategic processes eliminates a distraction, enabling management to focus its distinctive capabilities on areas critical to its strategic success” (p.1)

Managing the Risk of IT Outsourcing

While it can bring several benefits, IT outsourcing entails some risks. As it is the case in other types of investments or business ventures, the risk associated to an IT outsourcing project must be evaluated and managed. This paper proposes a framework for the management of IT outsourcing risk, and assesses the usefulness of the framework using data gathered about two cases of system development outsourcing. After providing a conceptual definition of risk and of risk exposure, the paper presents the proposed risk management framework. The two cases are then described along with the evaluation of the level of risk exposure of each, and the risk management mechanisms that were included in the contracts. The results of the study suggest that by charting the various items that contribute to risk exposure, and by specifically applying the appropriate mechanisms that can target the elements with the higher levels of risk exposure, outsourcing risk can be adequately managed. L'impartition des services informatiques, même si elle peut entrainer de nombreux bénéfices, implique un risque. Comme tout type d'investissement, ce risque doit être évalué et géré. Cet article propose un cadre d'analyse pour le risque d'impartition des services informatiques, et évalue ce cadre à l'aide d'une étude de cas. Ce cas présente deux décisions d'impartition de services informatiques, dans le domaine de l'assurance. Le niveau de risque de chaque décision est évalué et les mécanismes permettant de gérer ce risque sont présentés. Les résultats montrent que, en détaillant les facteurs de risque et les événenents correspondants, il est possible de cibler les éléments les plus risqués et de réduire le risque à un niveau acceptable.Outsourcing of IS, IS risk management, agency theory, transaction cost economics, case study, Sous-traitance des systèmes informatiques, gestion du risque des systèmes informatiques, théorie de l'agance, économie des coûts de transaction, étude de cas

Managing IT Outsourcing Risk: Lessons Learned

This document takes stock from several studies on outsourcing risk. A definition of risk is offered and illustration from many case studies is used to show how risk can be managed. Results show that an active risk management approach can reduce risk exposure subtantially while enabling the organizations to still reap the benefits associated with outsourcing. Cet article fait un constat des leçons tirées de récentes analyses du risque d'impartition. Une définition opérationnelle du risque d'impartition est donnée. Les mécanismes de gestion de risque sont également discutés. Les résultats de différentes études démontrent qu'une gestion active du risque permet de réduire sensiblement les niveaux d'exposition au risque, notamment dans le cas de contrats d'impartition des technologies de l'information.Outsourcing of IS, IS risk management, agency theory, transaction cost economics, decision making under risk and uncertainty, Impartition, gestion des risques, agence, coûts de transaction, décision, risque et incertitude

SOME CONSIDERATIONS ABOUT IT OUTSOURCING PROCESS

IT outsourcing is the practice of contracting out the running of a part of an organization computer department. It is not a new phenomenon, but the scale and scope of its occurrence has greatly increased over the last decade. Due to the fact that IT outsourcing has no obviously and quantifiable benefits, most of the business entities choose not to do outsource their IT. The paper is based on the idea of incapability of exact determination of IT services costs. The purpose of this research regards the layout of the current approaches to outsourcing, description of different types of IT outsourcing and their advantages and the analysis of some models which might be used in order to facilitate the IT decision making process.Outsourcing, Information Technology, Information Systems, Application Services Provider, IT Risks

Risks and Audit Objectives for IT Outsourcing

In the recent years, as a result of globalization, internet and IT progress, the outsourcing of IT services has seen an exponential growth. As a result more and more companies decide to outsource, partially or totally, their IT services. Nevertheless, the outsourcing process exposes both clients and service providers to a series of risks that can seriously affect their activities. Managing these risks by improving the quality and efficiency of internal control has made the ITO audit a necessary component for all the companies involved in this process. The goal of this paper is to identify analyze and map the influence areas of ITO risks in order to suggest a series of objectives for ITO audit.Information Technology, Outsourcing, Audit, Risks, Service Provider

IT Outsourcing Risk Management at British Petroleum

This paper reports the results of a study of three successive IT outsourcing contracts at British Petroleum (BP). We offer an operational definition of IT outsourcing risk and use it to assess the risk exposure associated with each contract. We then examine how the management at BP dealt with outsourcing risk. Our results show that careful and deliberate risk management can substantially attenuate the level of risk exposure, and that IT outsourcing risks can be managed. Ce document présente les résultats d'une étude de trois contrats d'impartition successifs. L'étude fut conduite chez British Petroleum. Une définition opérationnelle du risque d'impartition est donnée. Cette définition est ensuite utilisée pour déterminer le niveau de risque associé à chacun des contrats. Les mécanismes de gestion de risque sont également identifiés. Les résultats démontrent qu'une gestion active du risque permet de réduire sensiblement les niveau d'exposition au risque, notamment dans le cas de contrats d'impartition des technologies de l'information.Outsourcing of IS, IS risk management, agency theory, transaction cost economics, case study, Impartition des systèmes informatiques, gestion du risque d'impartition, gestion du risque, théories de l'agence et des coûts de transaction, étude de cas

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

IT Outsourcing Maturity Model

This paper presents a model for analysing IT outsourcing maturity in organizations. Organizations outsource their IT for reasons such as cost reduction, access to superior skill sets, focus on core competence, and strategic objectives. Organizations that outsource the development, operational and management of their IT activities to other companies are at various levels of maturity. This study identifies five levels of maturity based on literature review and informal interview discussion with practitioners. The five stages of maturity developed in this research are Insourcing, Forming, Storming, Norming, and Performing. These five stages of maturity are discussed in this paper and the implication for researchers and practitioners are identified