Albert Plugge

Managing change in IT outsourcing arrangements

Few studies in the field of IT outsourcing relations include the view of providers. Previous research has identified the lack of sustainability in service performance as a recurring problem, e.g. the continuous delivery of high quality services over time. It can be argued that IT outsourcing providers who manage to establish a dynamic fit between sourcing capabilities and their own organizational structure are less susceptible to changes in their clients’ environment. Moreover, IT providers who monitor their clients’ developments are expected to be able to adapt to changing client circumstances and realize a sustainable performance. This research is based on both qualitative and quantitative exploratory research. Three provider organizations were selected: a domestic provider, an offshore provider, and a global provider. To conclude, our case studies provided sufficient evidence that a fit between sourcing capabilities and organizational structure contributes to a positive sourcing performance. Our research revealed that providers that are able to adapt to changing client circumstances, while establishing a fit at the same time, succeed in achieving a sustainable performance. Since the provider-side of IT outsourcing arrangements is under-researched our study contributes to partially filling this gap. From a managerial perspective, our results suggest that monitoring and assessing changing client circumstances regularly are a prerequisite for providers to become an agile organization.

Fit between sourcing capabilities and organisational structure on IT outsourcing performance

Thus far, relatively few studies on the supplier side of Information Technology (IT) outsourcing arrangements have been based on empirical quantitative research. Previous research identified a recurring supplier problem, a lack of sustainability in IT performance. The literature revealed that a suppliers capabilities and organisational structure affect the supplier performance. We hypothesise that realising a fit between the necessary sourcing capabilities and organisational structure on the IT supplier side will result in a sustainable sourcing performance. We executed a survey research among employees involved in sourcing activities of three different IT outsourcing suppliers (N = 135). The results from our analysis provide evidence that these constructs can be used to analyse differences between the three types of service suppliers. Results indicate that suppliers who focus on establishing a fit are more willing or able to monitor if they achieve a sustainable performance.

Strategic Sourcing of R&D: The Determinants of Success

The outsourcing of the R&D function is an emerging practice of corporate firms. In their attempt to reduce the increasing cost of research and technology development, firms are strategically outsourcing the R&D function or repositioning their internal R&D organisation. By doing so, they are able to benefit from other technology sources around the world. So far, there is only limited research on how firms develop their R&D sourcing strategies and how these strategies are implemented. This study aims to identify which determinants contribute to the success of R&D sourcing strategies. The results of our empirical research indicate that a clear vision of how to manage innovation strategically on a corporate level is a determinant of an effective R&D strategy. Moreover, our findings revealed that the R&D sourcing strategy influences a firm’s sourcing capabilities. These sourcing capabilities need to be developed to manage the demand as well as the supply of R&D services. The alignment between the demand capabilities and the supply capabilities contributes to the success of R&D sourcing.

Governance of Multivendor Outsourcing Arrangements: A Coordination and Resource Dependency View

During the past decade, the scope of IT outsourcing arrangements evolved from single vendor to multivendor relationships requiring new forms of governance. Empirical research on governance in the context of multivendor outsourcing is scarce. The aim of this research is to develop a better understanding of the governance in multivendor IT outsourcing arrangements. Drawing on Coordination and Resource Dependency Theory, we studied the governance of multivendor arrangements in a case study. Our findings cover three main areas. First, the coordination of IT services between both client and vendors is intertwined, and, as such, they are highly interdependent. Secondly, our study shows that when multiple vendors are involved in IT service delivery, the position of each firm and clear relationship mechanisms should be captured by governance mechanisms. Finally, contracts should not only comprise service agreements between client and vendors, but also between vendors.

Coordinating Tensions in Orchestrating Blended Modes of Sharing and Outsourcing of Services

Shared Service Organizations (SSOs) act more and more as orchestrators, combining and integrating services from various sourcing modes to cater for business demands. Blended modes of shared services are related to the use of multiple delivery modes that requires intensive coordination to ensure improved service quality. Yet, the topic of coordinating blended service delivery modes as part of shared services has hardly been researched. The aim of this research is to develop a better understanding of the tensions that arise when coordinating multiple service delivery modes. Our analyses identified four areas of tensions: centralized and decentralized responsibilities, dual role of the orchestrator, balanced portfolio of coordination roles and standardizing or customizing services. We plea for more research in the role of SSO’s acting as sourcing orchestrators.

Strategic manoeuvers in outsourcing arrangements: The need for adapting capability in delivering long-term results

Purpose Adaptation is often seen as a key competitive advantage for outsourcing vendors. Outsourcing research has often assumed that vendor capabilities are static. However, as a result of uncertainties and/or changes in the client environment, vendors need to be able to adapt their outsourcing capabilities. The aim of our research is to compare two contrasting outsourcing approaches and illustrate how an adaptive approach may deliver better results for clients in the long term. Design/methodology/approach The paper uses a combination of literature and case study research. A retrospective case study approach was adopted, using interviews, observations and analysis of reports. Two case studies utilizing contrasting clients approaches were investigated and compared. In one of the case studies, the client reorganized activities first and then outsourced them, while in the other, the client did the reverse – outsourced first and then reorganized. Findings The findings indicate that reorganizing first and outsourcing afterwards contributes to a more controlled implementation, which results in a more defined and stable set of vendor outsourcing capabilities that contributed to short-term success. In contrast, outsourcing first and reorganizing later demonstrates a less controlled redesign of the client’s organizational structure, which requires a malleable set of outsourcing capabilities to accommodate future change. The latter strategic manoeuver results in an extended adaptation period, as some capabilities need to be developed over time. However, it may improve success over time as subsequent changes in the client environment can be catered for in a better way. Research limitations/implications Only two explorative case studies were performed, limiting confidence in the degree of generalization of the results. We plea for more research on the effect of context dependency as various contingencies may impact the adaptation of outsourcing capabilities; for example, the volatility of the client’s market or the stability of the technology concerned. Practical implications When a client applies a proactive manoeuver, reorganizing first and then applying outsourcing, the number of adaptive capabilities required of the outsourcing vendor is reduced, limiting the risk for the client in the short term. In the longer term, however, subsequent change requirements may be less well-accommodated. Originality/value Strategic manoeuvers within an outsourcing context have received limited attention in research. As far as we know, this is the first empirical research that investigates the benefits of vendors having adaptive capability.

Understanding the Modularization of Business Services: The Maturity of Firms in Bundling Services

Sourcing literature reveals that large firms bundle or unbundle existing business services by means of modularization to achieve organizational agility. However, one may assume that firms need some degree of maturity to manage the complexity that comes along with bundling modularized services. The aim of our research is to understand how modularization interrelates with firm maturity when bundling business services, a topic that has been given limited attention in sourcing literature. Based on an exploratory research amongst 110 firms we found evidence for the relevance of influencing factors on firm maturity in bundling services. The findings provide evidence that the number of business services and the size of the firm correlate with the maturity of the firm. More specifically, our analysis identified that the type of market in which a firm acts (i.e. private or public) and adding the Marketing business function to a bundle does not increase firm maturity. Our empirical research contributes to sourcing literature as we expanded previous research by taking a more in-depth view on business services while providing up-to-date insights.

An Examination of the Relationship Between Organizational Culture Determinants and Retained Organizations Growth Stages

Empirical research on the maturity of retained IT organizations has remained scarce. IS literature shows that studies do not investigate the effect of organizational culture determinants on the relationship with the growth stage of an retained organization. The aim of this paper is to examine the relationship between organizational culture determinants and retained organizations stages of growth. Data from three case studies was collected and the Social Exchange Theory is used to understand the degree of interaction between the staff of retained organizations. Our analysis identified that culture determinants form a predictable pattern with the growth stage of a retained organization. Specifically, the culture determinants Management and Focus fit with their assumed growth stage in all three case studies. This might indicate that both determinants are interrelated as executive management of a firm has to develop a clear focus to achieve their IT mission and goals. Moreover, from an individual level, the results show that the degree of social interaction between staff is influenced by the perception of IT in the organization.

Understanding Collaboration in Multisourcing Arrangements: A Social Exchange Theory Perspective

As IT functions of clients are often outsourced to multiple vendors, all partners have to take the multisourcing arrangement into account when providing services. This paper examines how a client establishes strategic collaboration within a multisourcing arrangement. Due to heterogeneous, but also overlapping resources and heterogeneous strategic interests, collaboration between partners is challenging as they have to develop and manage IT services on an operational level at the same time. Social Exchange Theory is used to understand the complexity of collaboration within a multisourcing arrangement. Dependent on the client’s multisourcing objectives for its vendors collaboration tensions become apparent. Our research reveals that when client and vendors pay more attention to creating common goals, mutual collaboration between the partners’ employees is increased. This results in an improvement of the operational performance of the IT services. On an individual level, it was found that the behaviour of individuals may compensate for the lack of collaboration and the lack of exchange of information between partners. Furthermore the research suggests that partners within a multisourcing arrangement have to anticipate exogenous developments and adapt in order to be resilient.

Understanding Resistance in IT Outsourcing: A Service Provider Perspective

Previous research identified that service providers are struggling with the transition phase. The aim of this research is to create a deeper understanding of the effects of service provider resistance to change on the duration of the transition phase. This paper presents the results from an explorative empirical study, based on five service providers in the field of IT outsourcing. Our findings are twofold. First, we found that all the providers under study indeed experienced the transition phase as a struggle and resistance to change was perceived as fierce. Second, resistance to change was found in each organisational subunit and, as such, the process of change can be described as incremental. Since the topic of resistance to change from the perspective of service providers has hardly been researched, our research aims to contribute by partly filling this gap.