This research examines how outsourced IT arrangements are influenced by ITIL processes that are recommended as being important for the success of outsourcing. The research employed both qualitative (focus groups, one exploratory and one supplementary) and quantitative (Structural Equation Modelling) methods to evaluate the effects of ITIL recommended practices on the outcomes of IT outsourcing arrangements. It used, as informants, Australian IT service managers. The initial part of the research showed that informants believe the ITIL framework can positively influence IT outsourcing relationships. An analysis of data from an initial focus group suggested that ITIL improves the outcomes of an outsourcing arrangement through better use of SLAs (service level agreements), more knowledge sharing, and more effective inter-organisational communication. This analysis research also revealed that the participants thought that it is through improving performance and customer satisfaction that ITIL leads to a better outsourcing relationship. The second part of the research confirmed that ITIL usage statistically impacts the quality of SLAs, but does not statistically impact knowledge sharing, communications quality, or overall evaluations (technical service quality, cost savings and commitment to the outsourcing arrangement). On the other hand, communications quality, a core element of ITIL’s philosophy, does, through its effect on technical service quality (or, in other words, vendor performance), have a substantial effect on evaluation. The research also highlighted the importance of technical service quality (i.e. performance), which is the major factor leading to a purchaser’s commitment to the outsourcing arrangement (producing a large statistical effect on that variable). This finding is consistent with prior research. When presented with the quantitative findings the informants in a second, supplementary focus group (all users of ITIL) suggested that, contrary to the results of the survey analysis, ITIL had played a very important role in the success of their outsourcing arrangements. They proposed that outsourcing success depends on how well ITIL recommended practices are exercised. The ITIL users in this focus group also suggested that understanding and meeting each other’s expectations is critical to outsourcing success, and is an indicator of “mature” implementation of ITIL. This is consistent with an alternative explanation for the statistical findings: that many firms, though not formally using ITIL, still focus effort on effective communications (a core ITIL suggestion), leading to positive outsourcing outcomes (Technical Service Quality, Satisfaction, and Commitment) even when ITIL was not formally employed. The research has enhanced our understanding of how ITIL can contribute to IT outsourcing relationships through improving SLA quality; it has also fore grounded the important mechanisms of communication quality and knowledge sharing. A key contribution of this research is that there were some inconclusive outcomes from the two studies of the relationship between ITIL implementation and IT outsourcing arrangements. There are apparent contradictions between the survey analysis and the outcomes of the two focus groups. This may be because the preliminary and supplementary focus groups comprised only ITIL users, and so their conclusions represented that perspective alone
