The Practice of Outsourcing by Willcocks, Leslie P. -- Read -- Imperial Library of Trantor

Index

The Practice of Outsourcing

Contents List of Figures List of Tables List of Contributors

Notes on co-authors

Professional Credits Acknowledgments Part I Introduction

1 Outsourcing Practice: The Search for Flexibility and Control

Introduction Outsourcing’s rise to prominence: 1990s IT trends, practices, and lessons

Trends 2009 to 2014

Conclusion References Appendix A: “Energen”: the future shape of IT sourcing?

Energen: decisions, decisions… How to choose suppliers? Continuous learning Commentary on Energen

Part II Studies of Outsourcing’s Rise to Prominence

2 Realizing Outsourcing Expectations: Incredible Promises, Credible Outcomes

Introduction The outsourcing study in brief Where do expectations come from? Financial expectations

Cost reductions Improved cost control Restructuring IT budgets

Business expectations

A return to core competencies Facilitating mergers and acquisitions Providing IT for start-up companies

Technical expectations

Improving technical service Access to technical talent Gaining access to new technologies

Political expectations

Proving efficiency Justifying new resources Duplicating success Exposing exaggerated claims Eliminating a troublesome function Breaking the glass ceiling

Guidelines for success Conclusion References

3 Contracting and Relationships in IT Outsourcing

Introduction Research methodology Survey findings

Sectors and types of organization Extent of outsourcing Future plans Activities and services outsourced Problems encountered Contractual issues Types of contract

Outsourcing relationships Business-based partnership A contractual and relationship framework Conclusion References

4 Cooperative Partnerships and IT Outsourcing: From Contractual Obligation to Strategic Alliance?

Introduction Transaction costs and strategic alliances Alliances and inter-oganizational relationships Cooperation Organizational culture Collaborating to compete: towards strategic IT partnerships? Case 1 – British Home Stores and CSC 1993–2003 Case 2 – BP Exploration: multiple alliances 1993–98 Case 3 – NV Philips and BSO-Origin Discussion and conclusions References

5 Offshore Outsourcing: A Country Too Far?

Introduction Outsourcing IT – theory and practice

Decision factors Types of contract Economic issues Relationship building and maintenance IT as a coordination technology “Domestic versus global” issues

Holiday Inns: a passage to India1

Acquisition and the move to Atlanta Dealing with legacy issues: 1993–Summer 1994 Evolving and deteriorating relationships: 1994 New problems From insourcing to offshore outsourcing: passage to India Departures and developments: Autumn 1994–Summer 1995

Analysis: offshore and onshore issues

On-site offshore insourcing: 1993–1994 Off-site offshore outsourcing: 1994–95

Comparison with theory Conclusions Note References

6 IT Outsourcing in Public Sector Contexts: Researching Risk and Strategy

Introduction Research approach

Research choices and methodology Method Building an analytical framework

Case study: IT outsourcing at LISA

History and background Selecting a supplier: 1994–95 1996: moving to contract 1996: post-contract management, skills and relationships 1997–99: service levels, developing applications, building infrastructure

Analysis and discussion of the LISA-EDS contract

Outsourcing: type and scope Vendor selection criteria and process The contract: substance, compliance and motivational mechanisms Retained capabilities and management processes Vendor-client partnering and relationships Distinctive risks (1) the public sector context Distinctive risks (2) supplier long-term market strategy

Implications and conclusions References

7 IT Sourcing: Examining the Privatization Option in Public Administration

Introduction Information technologies in context: the US government and privatization Research approach Case: the US Internal Revenue Service (IRS)

Background and context Project management of in-house systems development. Managing outsourcing contracts Other IT issues Future issues and developments

Case – Westchester County

Background and context IT outsourcing decision process Subsequent events and issues

Analysis and lessons

The public sector context The evaluation process IT sourcing decisions Retained IS capabilities

Conclusions References

8 Analyzing IT Outsourcing Decisions: Size, Interdependency and Risk

Introduction Research methodology Four types of IT sourcing decision Scale of IT sourcing decisions and client/supplier dependency Case histories of IT sourcing decisions “Total” outsourcing at the London Stock Exchange (LSE)

Context and overview Post-1992

Multiple supplier sourcing at ICI plc

Context and overview 1980–90 – a period of restructuring The 1990s and beyond Internal de-regulation of IT services Selective and competitive outsourcing Selecting the suppliers A world-class datacenter An alternative supplier selection strategy Risk and reward – the key to success? Evaluating outsourcing from a client perspective

Joint venture project sourcing at CRESTCo Ltd

Context and overview A joint venture approach to systems development

Insourcing at Royal Bank of Scotland

Context and overview Bank objectives Implementing the changes

Discussion and conclusion References

9 Information Technology Insourcing: Myths and Realities

Introduction Research method

Data collection Data analysis Four archetypes of insourcing ARCHETYPE 1 – senior executives enable internal IT managers to cut costs ARCHETYPE 2 – IT managers terminate failing outsourcing contracts ARCHETYPE 3 – IT managers defend insourcing ARCHETYPE 4 – senior executives confirm the value of IT

Discussion Implications for practice References

10 Contracts, Control and “Presentiation” in IT Outsourcing

Introduction The IT outsourcing contract

Nature of the outsourcing contract

The concept of control Post-contract management in IT outsourcing

Contract operationalization and control A. Service exchanges B. Service enforcement and monitoring C. Financial exchanges D. Financial control and monitoring E. Key vendor personnel F. Dispute resolution G. Change control and management

Field studies Research approach Findings

The contract Flexibility and changes Post-contract management Financial control and monitoring Penalty payments Monitoring of service levels and/or products Performance measures Interface and/or contact points

Discussion

The outsourcing contract Post-contract management and control

Conclusion References

Part III Studies 2000–2008: From IT to Business Process and Offshore Outsourcing

11 IT Outsourcing Configuration: Defining and Designing Outsourcing Arrangements

Introduction Overview of the configuration concept

The configuration model Case example Prior research concerning ITO configuration

The seven configuration attributes

Attribute #1: scope grouping Attribute #2: supplier grouping Attribute #3: financial scale Attribute #4: pricing framework Attribute #5: duration Attribute #6: resource ownership Attribute #7: commercial relationship

Testing ITO configuration

Methodology Results

Conclusion References

12 IT Outsourcing Success: A Framework for Assessing Intentions and Outcomes

Introduction A framework for assessing ITO success

Developing the 25-point list of possible intended outcomes Different organizations pursue different outcomes from IT outsourcing Desired outcomes also change over time Assessing the completeness of the framework The cases Case study findings A survey to assess the applicability of the framework Contextual information Outcomes applicable, initially sought, and currently sought Averaged outcomes-achieved scores compared to overall satisfaction

Discussion

Idiosyncratic nature of outcomes sought Techniques driving success and failure of IT outsourcing Is “relationship with supplier” an outcome? Generalizability of the findings from this study Conclusions and directions for future research

References

13 Business Process Outsourcing: The Promise of the Enterprise Partnership Model

Introduction Business Process Outsourcing (BPO) research Research scope and methodology The roots of the Xchanging business model

Learnings from the BP experience The London Stock Exchange – and other learning experiences One more piece of the jigsaw

Creating the Xchanging company The Xchanging business model in action: evidence from the research

The anatomy of partnership Competencies – “the DNA of Xchanging” The People Competency in action

The Service Competency in action

The Process Competency in action The Technology Competency in action The Environment Competency in action The Sourcing Competency in action The Implementation Competency – grit in the oyster?

Progressing the Enterprise Partnerships through four phases of implementation The Xchanging business model – an assessment

1. An assessment of partnership, Xchanging-style 2. An assessment of the potential sustainability of Xchanging enterprise partnerships An assessment of the applicability of the Xchanging business model

Subsequent developments 2005–08 Conclusions References

14 Outcomes from Offshore Outsourcing: Evidence from a Client’s Perspective

Introduction India still dominates the offshore outsourcing1 market

Many practitioners are struggling with offshore outsourcing of IT work

Research method

A pluralistic case study Data collection: February 2004 to September 2005

Case description: BIOTECH’s offshore journey

1. The CIO seeks to reduce IT costs through offshore outsourcing 2. Biotech launches 21 projects offshore in 2003 to 2005 3. Offshore outcomes are unclear

How participants viewed project outcomes

Measures of project outcomes Participants’ ratings on 21 project outcomes

Project level findings

Project level data analysis Seven project level findings

Organization level findings Case validation Conclusion – implications for practice and research

Implications for clients Implications for suppliers Implications for research

References Appendix A: Prior research on IT sourcing Appendix B: Interview guide Appendix C: Organizational chart of Biotech’s corporate IT department Appendix D: Biotech offshore projects

15 Offshore Outsourcing, Strategy and the Role of Social Capital

Introduction US Manufacturing’s background and offshore engagements

US Manufacturing’s first attempt with offshore outsourcing Tacit knowledge cannot be transferred through documents US Manufacturing’s second attempt with offshore outsourcing

Practices for building and protecting social capital

Practice 1 – lay the foundation for trust Practice 2 – create shared language, codes, and systems of meaning among parties Practice 3 – design social linkages Practice 4 – require suppliers to protect social capital investment through succession planning Practice 5 – protect intellectual capital

Conclusion – social capital as a business asset References

16 Creating Global Shared Services: Sourcing Lessons from Reuters

Introduction Conceptualizing shared services as four programs of change Phase 1 business process redesign, organizational redesign and technology enablement Deciding how to deliver an additional 33% savings Phase II: organizational redesign, business process redesign and sourcing redesign Conclusion – moving up the learning curve References

Index

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