David Feeny

Outsourcing IT: The strategic implications

Abstract IT outsourcing is a growing phenomenon in the developed economies. However, it is not often managed as strategically as it might be. Drawing on evidence from 30 case histories in the United Kingdom, this article presents the basis for a strategic approach. It identifies six critical factors around which IT outsourcing decisions can be based, provides a framework for decision-making based on organizational experiences of different levels of success, and discusses the additional factors that need to be borne in mind as a reality check, to ensure that the IT outsourcing decision can be delivered upon. The paper argues for a more strategic approach to IT outsourcing and provides frameworks to enable decision-makers to think through the issues presented by an impending IT sourcing decision.

Business Process Outsourcing: The Promise of the Enterprise Partnership Model

In this chapter we report our research into Business Process Outsourcing (BPO). Using case studies, we assess initial progress and challenges to 2005, then update developments to 2008. As is reflected in these cases, by 2001 the outsourcing of so-called IT-enabled back office support processes was beginning to be seen as a viable strategy by many large corporations, fuelling forecast revenue growth of 10%-15% per annum in a market already estimated then as worth nearly a quarter of that of IT outsourcing (Lacity and Willcocks, 2001). Figures for BPO are, for many reasons, notoriously difficult to arrive at accurately, but in a review of several studies Willcocks and Lacity (2006) suggested that in 2006 the market could have been as big as

Making the Outsourcing Decision

US80 billion and would grow at a forecast 10–12% over the next five years.1

In search of Europe's information technology leaders: review of methods and empirical evidence

In this chapter, we present our ITO decision framework which guides practitioners to consider business, economic, and technical factors. Originally published as Lacity, Willcocks, and Feeny (1996), this framework is still remarkably relevant. When discussing business factors, we dismiss the traditional “core versus non-core” criterion because we found it was difficult for practitioners to differentiate IT activities on this basis. Instead, we guide practitioners to consider an IT activity’s contribution to competitive advantage as well as to its critical support of daily business operations. In the discussion of economic factors, we challenge practitioners to examine the practices that lead to economic efficiency rather than just economies of scale. Surely, suppliers operate on a larger scale than internal IT departments, but economic efficiency depends more on practices such as standardization, centralization, and tight controls than size. In the discussion of technical issues, we discuss a technology’s maturity (stability, measurability, and requirements certainty) and technology’s integration with other business functions as the most important technical criteria to consider. This framework continues to be used by practitioners and is still widely cited by academics.

Transforming a human resource function through outsourcing: the BAE systems - xchanging enterprise partnership

Abstract. Information technology (IT) leaders — companies that successfully exploit IT to achieve business results — generate immense interest among practitioners and academics. From a practitioners perspective, IT leaders provide benchmarks of leading IT management practices which others may emulate to achieve success. From an academic perspective, IT leaders provide the ‘data’ for the creation of frameworks and theories of IT management. While US IT leaders are regularly assessed by academics, trade magazines, consultants and benchmarking firms, there has been no Europe‐wide assessment of IT leadership. This neglect is detrimental to European IT practitioners and academics who may discover that American IT management practices are not transferrable in the European context. In this article, we analyse the construct, context and statistical validity of six methods for identifying European IT leaders. Based on this analysis, two methods (expert ratings and citation counts) were used to generate a preliminary list of European IT leaders and laggards. While individual experts were reticent about volunteering their ratings, their collective view appears to generate a worthwhile list with high construct validity. Citation counts represent a more accessible process for list generation, with high statistical validity. However, an attempt to correlate expert ratings with a list based on citation counts confirms that the latter has questionable construct validity.

BPO as Enterprise Partnership: The BAE-XChanging Transformation Strategy for HR Procurement

Imagine you are the head of a back-office function in a multi-billion dollar, globally dispersed manufacturing company. Your CEO mandates that you have three years to slash your costs by 40% while improving service levels. A mission impossible?

The Value of Selective IT Sourcing

By 2005, European business process outsourcing (BPO) is estimated as worth 72 billion Euros in revenues (2002 comparator: 43 billion). In semi-recessionary times from 2001, back-office activities and functions such as IT, Human Resource administration, procurement, finance and accounting, legal, energy management and real estate management have been obvious targets for efficiency, and even transformation, drives. But how to deliver on the very real promises outsourcing offers? In this chapter, we look at innovative, strategic approaches to this question, involving risk-reward contracting, the creation of a third entity joint owned by client and supplier, and the application of distinctive supplier core capabilities. The example we will focus on, drawn from BAE Systems’ experiences and those of ‘pure play’ BPO supplier Xchanging, will be procurement.