Explaining I.T. outsourcing purchasers' dissatisfaction

Outsourcing of IT is a popular strategy, argued by proponents to deliver a range of benefits including cost savings, increased service quality, and strategic advantages. However, empirical evidence of the success of outsourcing is limited, and several recent studies have suggested widespread dissatisfaction exists amongst purchasers. This paper analyses one such study to determine predictors of outsourcing satisfaction (and
dissatisfaction). The analysis reveals that, for purchasers, IT outsourcing satisfaction and perceived value (which are highly correlated) depend on whether strategic benefits are obtained, and on the technical service quality provided by vendors. Both in turn depend on whether expected cost savings are obtained. The implications of these findings for both vendors and purchasers are discussed.

Outsourcing:assessing the risks and benefits for organisations, sectors and nations

Purpose - This research aims to assess the risks and benefits of outsourcing for organisations, sectors and nations. The literature on outsourcing contains little evidence of research on holistic issues of its impact at systems levels beyond the firm, notably sectors and nations. Design/methodology/approach - A Delphi study with senior strategists from private and public sectors captured perspectives and specific observations on benefits and risks of outsourcing. Emergent issues on outsourcing policy, strategy and decision-making processes were synthesised into a framework for analysing factors associated with outsourcing. Findings - The findings suggest that a more holistic view of outsourcing is needed, linking local, organisational issues with sector and national level actions and outcomes. In this way, aggregate risks and benefits can be assessed at different systems levels. Research limitations/implications - Future research might address the motivations for outsourcing; currently there is little research evidence to assess whether outsourcing is a mechanism for failing to solve internal problems, and moving responsibility and risk out of the firm. Additionally most outsourcing research to date has concentrated on an activity either being "in" or "out"; there is little research exploring the circumstances in which mixed models might be appropriate. Practical implications - The framework provides an aid to research and an aide memoire for managers considering outsourcing. Originality/value - This paper contributes to knowledge on understanding of outsourcing at different systems levels, particularly highlighting the implications of outsourcing for sectors and nations. Previously most research has focused at the level of the firm or dyadic relationship. © Emerald Group Publishing Limited.

Cloud computing : how does it differ from IT outsourcing and what are the implications for practice and research?

The purpose of this paper is to provide an evolutionary perspective of cloud computing (CC) by integrating two previously disparate literatures: CC and information technology outsourcing (ITO). We review the literature and develop a framework that highlights the demand for the CC service, benefits, risks, as well as risk mitigation strategies that are likely to influence the success of the service. CC success in organisations and as a technology overall is a function of (i) the outsourcing decision and supplier selection, (ii) contractual and relational governance, and (iii) industry standards and legal framework. Whereas CC clients have little control over standards and/or the legal framework, they are able to influence other factors to maximize the benefits while limiting the risks. This paper provides guidelines for (potential) cloud computing users with respect to the outsourcing decision, vendor selection, service-level-agreements, and other issues that need to be addressed when opting for CC services. We contribute to the literature by providing an evolutionary and holistic view of CC that draws on the extensive literature and theory of ITO. We conclude the paper with a number of research paths that future researchers can follow to advance the knowledge in this field.

Cloud computing adoption in Australia : the benefits, risks and implications for accounting

The purpose of this paper is to empirically examine the state of cloud computing adoption in Australia. I specifically focus on the drivers, risks, and benefits of cloud computing from the perspective of IT experts and forensic accountants. I use thematic analysis of interview data to answer the research questions of the study. The findings suggest that cloud computing is increasingly gaining foothold in many sectors due to its advantages such as flexibility and the speed of deployment. However, security remains an issue and therefore its adoption is likely to be selective and phased. Of particular concern are the involvement of third parties and foreign jurisdictions, which in the event of damage may complicate litigation and forensic investigations. This is one of the first empirical studies that reports on cloud computing adoption and experiences in Australia.

Step by step: Breaking outsourcing down into manageable phases

The phases of the outsourcing process and the actions required are discussed. The most difficult and the most important phase of o a successful outsourcing process is to know what activities to outsource. The criteria for suppliers selection must be developed and should cover the reasons why the activity is being outsourced, the expected benefits and potential dangers. Contract negotiation is a very important phase of the outsourcing contract in which rules of the outsourcing are set. The transfer of activity phase corresponds to the reassignment of control of the outsourced activity from the outsourcer to the contractor.

Information Systems Outsourcing Adoption

Dissertação apresentada como requisito parcial para obtenção do grau de Mestre em Estatística e Gestão de Informação

El Outsourcing en la dinámica de sistemas hacia mercados extranjeros

Este trabajo recopila literatura académica relevante sobre estrategias de entrada y metodologías para la toma de decisión sobre la contratación de servicios de Outsourcing para el caso de empresas que planean expandirse hacia mercados extranjeros. La manera en que una empresa planifica su entrada a un mercado extranjero, y realiza la consideración y evaluación de información relevante y el diseño de la estrategia, determina el éxito o no de la misma. De otro lado, las metodologías consideradas se concentran en el nivel estratégico de la pirámide organizacional. Se parte de métodos simples para llegar a aquellos basados en la Teoría de Decisión Multicriterio, tanto individuales como híbridos. Finalmente, se presenta la Dinámica de Sistemas como herramienta valiosa en el proceso, por cuanto puede combinarse con métodos multicriterio.

Analysis of a large-scale IT outsourcing "failure": what lessons can we learn?

Much of the research that has been carried out into outsourcing is based on relatively successful case studies. Yet drawing inferences from case studies when those with largely negative outcomes rarely see the light of day represents a significant problem. When negative cases are systematically unrepresented, there is less opportunity to subject theory to scrutiny. This chapter goes some way towards redressing this trend, by reporting on a large scale “selective” outsourcing arrangement that has been publicly described as a failure — the Australian Federal Government’s “whole of government” IT infrastructure outsourcing initiative. This initiative, originally promoted as likely to lead to a billion dollar saving, was abandoned early in 2001, after a damning public report by the Australian Auditor General. However, a detailed study of the initiative suggests that the “failure” occurred despite the project adhering to many of the recommended guidelines for successful outsourcing that had been derived from earlier case analysis. The findings have important implications for decision makers confronted with outsourcing choices. The study suggests that the risks of outsourcing are often downplayed, or ignored in the rush to reap the expected benefits. The study also suggests that expectations of savings from outsourcing IT are often substantially higher than those that have been empirically confirmed in the field. Decision makers are advised that key assumptions about costs, savings, managerial effort, and the effects of outsourcing on operational performance might be incorrect, and to plan for their outsourcing activity accordingly. They should pay particular attention to coordination and transaction costs, as these tend to be overlooked in the business case. These costs will be magnified if “best in breed” multiple-vendor outsourcing is chosen, and if contracts are kept short. Decision-makers are also warned of the difficulties they are likely to have at the end of an outsourcing contract if there is not a large and robust pool of alternative vendors willing to bid against the incumbent.

The derivation of a conceptual model for outsourcing IT security

IT security outsourcing is the establishment of a contractual relationship with an outside vendor to assume responsibility for one or more security functions. Outsourcing in IS has had a variable history of success and the complexity of the decision making process leads to a substantial degree of uncertainty. This is especially so in the realm of IS security since the protection of both hardware and software systems in is placed in the hands of an external provider. This is the second paper discussing the improvement of the effectiveness of the decision making process by means of a conceptual model using Soft System Methodology techniques that integrates security benefits, costs and their respective performance measures. In this paper the methodology used to develop the model and its validation are discussed.

The derivation of a conceptual model for IT security outsourcing

IT security outsourcing is the establishment of a contractual relationship between an organization with an outside vendor which assumes responsibility for the organisation’s security functions. Outsourcing in IS has had a variable history of success and the complexity of the decision making process leads to a substantial degree of uncertainty. This is especially so in the realm of IS security since the protection of both hardware and software systems is placed in the hands of an external provider. This paper is a fuller and more comprehensive paper of a previous paper outlining the effectiveness of the decision making process by means of a conceptual model using Soft System Methodology techniques that integratessecurity benefits, costs and their respective performance measures. In this paper the methodology used to develop the model is discussed in detail.

The Australian Government`s abandoned infrastructure outsourcing program: what can be learned?

Early in 2001, after a damning public report by the Auditor-General, the Australian Federal Government abandoned its highly promoted “whole of government” IT infrastructure outsourcing initiative. This about-face was greeted in the press with reports that the initiative was a “fiasco”. Yet a four-year case study conducted by the authors suggests a more complex picture. Like many other “selective” outsourcers of IT, the Federal Government had been led to believe that it was adopting a relatively low risk strategy that would, if well managed, lead to significant cost savings and operational benefits. Instead, despite having implemented many widely promoted “best practices”, the Federal Government found a substantial discrepancy between what outsourcing promised to deliver, and what was actually achieved. In this respect their experiences were no different from those of many other large IT organizations engaged in selective IT outsourcing, who responded to a substantial contemporaneous survey. This case study examines why the Government’s expectations were not achieved, and arrives at conclusions that have important implications for decision makers confronted with choices about sourcing IT service delivery.

Understanding informations systems outsourcing success and risks through the lens of cognitive biases

Because outsourcing of information systems (IS) is now widespread, it is generally assumed to be successful. It is also often assumed that outsourcing risks are easily managed. In this paper we adopt an “evidence based management” approach to first test these assumptions through a qualitative metaanalysis of academic studies into IS outsourcing outcomes. Our research reveals a shortage of reliable and valid evidence for outsourcing’s benefits, and for the level of risk involved. We then use data from a series of focus groups to explain the paradox of widespread adoption of a strategy with limited empirical support. These focus groups were interpreted through the lens of research on a
range of cognitive mechanisms and biases that are known to affect decision makers. We conclude that cognitive mechanisms that are likely to affect sourcing decisions include framing biases, cognitive dissonance, attribution error, and the “optimism”, “confirmation”, “disconfirmation” and “overconfidence” biases. Given the shortage of supporting evidence, and the potential for these biases to operate, we argue that researchers need to be more critical in their analysis of reports of the success and risks of IS outsourcing.

Testing some myths about I.T. outsourcing : a survey of Australia's top 1000 firms

This study examines the extent to which surveyed outcomes of IT outsourcing supported several commonly-argued propositions. Following confirmatOl), factor analysis, eight measures of success were used: access to skilled staff, technology benefits, economies of scale, cost reductions, strategic benefits, technical service quality, capacity to concentrate on core business, and overall satisfaction/value. The analysis produced some surprising findings. Some widely-promoted benefits of outsourcing were reported by most respondents, but other benefits that have been similarly promoted (such as cost savings) were reported by only a minority of respondents. There were no differences in success outcomes between medium-sized «500 employees), large (500 to 1000 employees), and very large (1000+ employees) organizations. There were some minor differences between government agencies and finns from the private sector, but no differences for key outcomes. Contrary to findings from case study research, "selective" outsourcing was no more successful than "total" outsourcing, although "total" outsourcing was uncommon. On the basis of these results, decision makers are urged to be cautious when planning to outsource IT services, and to be critical of claims that they will make substantial savings from outsourcing, or that outsourcing will automatically allow them to refocus more on their core business.