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.

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.

IT-supported business process outsourcing (BPO): the good, the bad and the ugly

Outsourcing decisions are not, technically, irreversible. But in practical terms the organizational disruption and financial costs of bringing services back in house (“backsourcing”) mean that few organizations revert, even when quite dissatisfied with an arrangement. Instead, organizations typically seek to move to another outsourcing arrangement, that is sometimes less attractive than the original in-house delivery. Preliminary evidence from studies of business process outsourcing (BPO) experiences, like those into IT outsourcing’s success, suggests that only a minority of organizations report their BPO arrangements as satisfactory, implying that many are caught in this “can’t go back” bind. In this paper the authors examine two organizations contemplating the adoption of BPO, and consider their expectations and experiences in light of existing empirical literature. The paper concludes with a set of principles to assist organizations to avoid BPO failure.

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.

Enabling innovation in information technology outsourcing : an empirical study

Information technology outsourcing has become a pervasive and important phenomenon in business organizations and there is substantial evidence about its benefits and pitfalls. Initially, firms used outsourcing as a way to lower costs, gain access to expertise and focus on core activities. Recently, there is a shift in focus and more firms are outsourcing to attain innovative products and services. However, current research is still unclear about how innovation can be achieved through outsourcing. Drawing predominantly from the dynamic capability theory, the objective of this paper is to explore how absorptive capacity unfolds as a process within and between firms when client firms outsource their information technology services with expectations of innovation generation. In this paper, we propose a research model that links absorptive capacity to innovation generation. We draw on three case studies to focus on how absorptive capacity, as a process, impacts innovation generation. Results show that assimilation and transformation stages are critical in generating radical innovation while acquisition and exploitation play a key role in incremental innovation. The implications of these findings for both researchers and practitioners are discussed.

Why, how, what for? : motivations, actions and expectations in habitual entrepreneurship

Principal topic: Is habitual entrepreneurship different? Answering this is important to the field, however there is little systematic evidence, thus far. We addresses this by examining the role experience plays at three possible points of difference: motivations, actions and expectations; and by comparing those currently in the process of starting a business with those who have recent success in business creation. Firstly, we assess the balance of opportunity versus necessity motivation, internally versus externally stimulated decision processes and future growth aspirations. Literature suggests novices are more likely motivated to nascency out of necessity, and favour a manageable business size, while habitual entrepreneurs are more likely motivated by internally stimulated or idea driven processes. Secondly, we examine actions undertaken by successful experienced founders during gestation, contrasting ‘information collection’ and ‘opportunity definition’. Drawing on prior research we expect novices more likely to have enacted ‘information search’ while habitual entrepreneurs enact ‘opportunity definition’. Thirdly, we examine perceptions of venture success, where findings on overconfidence suggest that habitual entrepreneurs expect a higher chance of success for their ventures, while inexperience leads novices to underestimate the difficulty of entrepreneurial survival. Method: Empirical evidence to test these conjectures was drawn from a screened random sample of over 1100 Australian nascent and newly started business ventures. This information was collected during 2007/8 using a telephone survey. Results and Implications: Why do habitual entrepreneurs keep coming back? Findings suggest that while the pursuit of opportunity is shared by novice and experienced entrepreneur alike, consideration of repeat entrepreneurship may be motivated by a desire for growth. While idea driven motivations might not delineate a distinction during nascency, it does seem to be a factor contributing to the success of young firms. This warrants further research. How do habitual entrepreneurs behave differently? It seems they act to clearly define market opportunities as a matter of priority during venture gestation. What effect does entrepreneurial experience have on future expectations? Clearly a sense of realism is drawn over the difficulties that might be faced, and accords more circumspect judgements of venture survival. This finding informs practitioners considering entrepreneurship for the first time.

Managing knowledge in an outsourcing environment

What an organisation does versus what it out-sources to the market is a classic boundaries of the firm question that has previously been dominated by efficiency arguments. However, a knowledge-based view suggests these boundaries are integral to the ability of a firm to deploy existing knowledge stocks efficiently, as well as develop new knowledge through learning that will drive future competitiveness. Furthermore, the nature of these boundaries, in respect of their permeability is critical in understanding the likelihood of knowledge flowing into and out of the organisation. Using these concepts, we present a case study of Main Roads Western Australia to illustrate how these principles have allowed it to start rebuilding its internal capabilities through repositioning its operational boundaries and via ensuring their boundaries are highly porous as they move more major projects into alliance contracts.

BIM : expectations and a reality check

BIM (Building Information Modelling) is an approach that involves applying and maintaining an integral digital representation of all building information for different phases of the project lifecycle. This paper presents an analysis of the current state of BIM in the industry and a re-assessment of its role and potential contribution in the near future, given the apparent slow rate of adoption by the industry. The paper analyses the readiness of the building industry with respect to the product, processes and people to present an argument on where the expectations from BIM and its adoption may have been misplaced. This paper reports on the findings from: (1) a critical review of latest BIM literature and commercial applications, and (2) workshops with focus groups on changing work-practice, role of technology, current perceptions and expectations of BIM.

Levelling expectations across different years in an undergraduate degree to support work-related learning : evidence for a multi-pronged approach.

One of the ways in which university departments and faculties can enhance the quality of learning and assessment is to develop a ‘well thought out criterion‐referenced assessment system’ (Biggs, 2003, p. 271). In designing undergraduate degrees (courses) this entails making decisions about the levelling of expectations across different years through devising objectives and their corresponding criteria and standards: a process of alignment analogous to what happens in unit (subject) design. These decisions about levelling have important repercussions in terms of supporting students’ work‐related learning, especially in relation to their ability to cope with the increasing cognitive and skill demands made on them as they progress through their studies. They also affect the accountability of teacher judgments of students’ responses to assessment tasks, achievement of unit objectives and, ultimately, whether students are awarded their degrees and are sufficiently prepared for the world of work. Research reveals that this decision‐making process is rarely underpinned by an explicit educational rationale (Morgan et al, 2002). The decision to implement criterion referenced assessment in an undergraduate microbiology degree was the impetus for developing such a rationale because of the implications for alignment, and therefore ‘levelling’ of expectations across different years of the degree. This paper provides supporting evidence for a multi‐pronged approach to levelling, through backward mapping of two revised units (foundation and exit year). This approach adheres to the principles of alignment while combining a work‐related approach (via industry input) with the blended disciplinary and learner‐centred approaches proposed by Morgan et al. (2002). It is suggested that this multi‐pronged approach has the potential for making expectations, especially work‐related ones across different year levels of degrees, more explicit to students and future employers.