Computing and Information Systems - Theses

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    Towards reframing outsourcing: a study of choices regarding processes, structures, and success: exploration into an organization's choices regarding the outsourcing process lifecycle, the configuration structures, and the nature of success
    CULLEN, SARA ( 2005)
    Pervasive adoption has made outsourcing a growing multi-billion dollar industry. The market is ever maturing, suppliers and their offerings ever expanding, and technology advancements are increasingly enabling the separation of management, delivery, and operations. Furthermore, with "offshore outsourcing" attracting increasing attention, the level of outsourcing activity seems set to grow even larger, lending a new dimension to the role of a CIO — that of service broker between internal and external service providers (Baty, 2001). This is in spite of all too frequent failures emerging in recent studies. Consistent with the self-interest arguments of agency theory and transaction cost economics, outsourcing unleashes powerful forces of organizational self-interest that can spell doom for the inexperienced outsourcing manager. Research into outsourcing has attempted to help managers achieve greater success with outsourcing; however, along with mixed success has come mixed advice. Numerous studies propose a wide range of recipes for success, but problems continue, seemingly unabated. In particular, despite over a decade of research into IT outsourcing (ITO), no comprehensive models of ITO processes, structures, or success have emerged. This research attempts to achieve a degree of unification, of what is presently a fragmented literature, by developing and testing three frameworks designed assist research and management with decision-making. Those three frameworks are as follows: (1) a process framework for ITO consisting of a four-phase "Outsourcing Lifecycle" with 54 key activities, (2) a taxonomic framework, "Configuration", for classifying different ITO structures, comprised of seven structural attributes with 27 high-level options at both the deal (individual outsourcing arrangement) and portfolio (organizational) level, and (3) a conceptual framework for measuring ITO success, with 25 goals/outcomes grouped into three categories of financial, operational, and strategic. These three frameworks were developed through careful analysis of 100 outsourcing cases from 1994 to 2003, three ITO surveys conducted in Australia during 1994 to 2001, and the literature. To explore their validity and usefulness, the frameworks were tested during 2003 and 2004 via in-depth interviews in seven large Australian organizations. The findings add further weight to the conclusions from the original 100 cases, surveys, and the prior literature: the three frameworks are important for understanding, comparing, and managing ITO arrangements. Building on these three frameworks, the primary contribution of this thesis is its demonstration that outsourcing is more about complex choices than has ever been recognized in the prior literature. Organizations contemplating outsourcing face an inestimable number of choices. The fundamental proposition of this thesis is that when guided on what choices must be made, the rationale behind the choices, and the potential issues each choice creates, management can make better decisions to achieve their desired objectives. The implication for management of this insight is that if made and managed appropriately, sound choices will enable firms to manage the extremely strong forces of organizational self-interest and help deliver benefits that outsourcing can be capable of delivering. The implication for researchers is that prior studies may have yielded inconsistent and incomplete results because researchers failed to recognize the different choices that firms face, and their importance, in fully understanding ITO.