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

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

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

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

Managing IT Outsourcing Risk: Lessons Learned

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.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

Assessing the Risk of IT Outsourcing

Ce texte porte sur l'évaluation du risque d'impartition des services informatiques. Le risque est défini ici comme étant fonction d'événements indésirables pouvant résulter d'une décision d'impartir, et des facteurs pouvant mener à ces événements indésirables. La théorie des coûts de transaction et la théorie de l'agence servent de base théorique à l'identification des principaux facteurs de risque. Les événements indésirables sont identifiés à partir d'une recension des écrits sur l'impartition des services informatiques.Outsourcing decisions, and contractual arrangements of the type required by an IT outsourcing deal, entail risks. This is not to say that outsourcing is bad in itself. It only means that, as in other risky business ventures such as new product development, capital investments, and IS projects, risk assessment and risk management are important contributors to the success of an IT outsourcing venture. This paper focuses on risk assessment. After providing a brief conceptual definition of risk, the paper reviews the empirical literature in order to identify the0501n undesirable outcomes that may result from an IT outsourcing deal. It then uses transaction cost and agency theory as a primary theoretical basis, and proposes a framework for categorizing risk factors which have been identified in the literature. Finally, the paper discusses the dynamics of risk, by examining how the various risk factors are linked to the undesirable outcome

Lithological and textural controls on radar and diurnal thermal signatures of weathered volcanic deposits, Lunar Crater region, Nevada

Radar backscatter intensity as measured by calibrated synthetic aperture radar (SAR) systems is primarily controlled by three factors: local incidence angle, wavelength-scale roughness, and dielectric permittivity of surface materials. Radar observations may be of limited use for geological investigations of surface composition, unless the relationships between lithology and the above characteristics can be adequately understood. In arid terrains, such as the Southwest U.S., weathering signatures (e.g. soil development, fracturing, debris grain size and shape, and hill slope characteristics) are controlled to some extent by lithologic characteristics of the parent bedrock. These textural features of outcrops and their associated debris will affect radar backscatter to varying degrees, and the multiple-wavelength capability of the JPL Airborne SAR (AIRSAR) system allows sampling of textures at three distinct scales. Diurnal temperature excursions of geologic surfaces are controlled primarily by the thermal inertia of surface materials, which is a measure of the resistance of a material to a change in temperature. Other influences include albedo, surface slopes affecting insolation, local meteorological conditions and surface emissivity at the relevant thermal wavelengths. To first order, thermal inertia variations on arid terrain surfaces result from grain size distribution and porosity differences, at scales ranging from micrometers to tens of meters. Diurnal thermal emission observations, such as those made by the JPL Thermal Infrared Multispectral Scanner (TIMS) airborne instrument, are thus influenced by geometric surface characteristics at scales comparable to those controlling radar backscatter. A preliminary report on a project involving a combination of field, laboratory and remote sensing observations of weathered felsic-to basaltic volcanic rock units exposed in the southern part of the Lunar Crater Volcanic Field, in the Pancake Range of central Nevada is presented. Focus is on the relationship of radar backscatter cross sections at multiple wavelengths, apparent diurnal temperature excursions identified in multi-temporal TIMS images, surface geometries related to weathering style, and parent bedrock lithology

Lithologic controls on AIRSAR signatures of bedrock and alluvium, at Lunar Crater, Nevada

Radar backscatter intensity as measured by calibrated synthetic aperture radar (SAR) systems is primarily controlled by three factors: local incidence angle, wavelength-scale roughness, and dielectric permittivity of surface materials. In order to make adequate use of radar observations for geological investigations of surface type, the relationships between lithology and the above characteristics must be adequately understood. In arid terrains weathering signatures (e.g. fracturing, debris grain size and shape, slope characteristics) are controlled to some extent by lithologic characteristics of the parent bedrock. These textural features of outcrops and their associated debris control radar backscatter to varying degrees. The quad-polarization JPL AIRSAR system allows sampling of textures at three distinct wavelength scales: C-band (5.66 cm), L-band (23.98 cm), and P-band (68.13 cm). This paper presents a discussion of AIRSAR data using recent field observations of weathered felsic and basaltic volcanic rock units exposed in the southern part of the Lunar Crater Volcanic Field, in the Pancake Range of central Nevada. The focus is on the relationship of radar backscatter at multiple wavelengths to weathering style and parent bedrock lithology

La régie des services informatiques : Le rôle de la mesure et des compétences dans les décisions d'impartition

In order to cope with an increasingly difficult environment, organizations adopt more efficient and more flexible structures. These structures include delocation, divestment, strategic alliances and even the virtual organization. These modifications often seek to centre the organization on its core competencies. Many strategic alliances follow this logic. Organizations choose a partner in order to use its distinctive competencies and to maximize the use of their own competencies. In this line of reasoning, information systems (IS) outsourcing is seen as a divestment of activities that are not at the core of the organization's operations. Results presented in this paper, based on a survey of 641 Canadian firms, support this trend. They also show the importance of precise and enforceable measures in managing outsourcing contracts. Les organisations tendent de plus en plus à se recentrer sur les activités liées à leurs compétences de base. Ce faisant. elles cèdent un nombre croissant d'activités à des fournisseurs. Ce phénomène est remarquable dans le secteur informatique. L'établissement de ces contrats d'impartition pose toutefois des contraintes, notamment quant à la mesurabilité des activités imparties. Cette étude vérifie ce phénomène de recentrage et l'importance des problèmes de mesure des activités dans le secteur informatique.Organizational Economics, Outsourcing, Économie des organisations, impartition, soustraitance

A Multi-level Investigation of Information Technology Outsourcing

This study proposes and tests a model of the information technology (IT) outsourcing decision that includes antecedents of both transaction costs and production costs. Production costs show the most robust influence on governance. Skills required to execute the activities, interdependence between the activities, and firm-level characteristics – uncertainty and knowledge intensity – are the main explanatory variables of the decision. Transaction-level uncertainty is the only transaction cost variable found to influence the decision