Mc. Lacity et Lp. Willcocks, AN EMPIRICAL-INVESTIGATION OF INFORMATION TECHNOLOGY SOURCING PRACTICES - LESSONS FROM EXPERIENCE, Management information systems quarterly, 22(3), 1998, pp. 363-408
Citations number
33
Categorie Soggetti
Management,"Information Science & Library Science","Computer Science Information Systems","Computer Science Information Systems
Following Kodak's landmark information technology (IT) outsourcing dec
isions in 1989 the IT outsourcing market grew to 76 billion dollars in
1995. As the outsourcing market continues to grow and as new contract
ing options emerge, the accumulated experiences of firms offer signifi
cant opportunities for learning. This paper builds on a previous colle
ction of data on 61 IT sourcing decisions made in 40 US. and U.K. orga
nizations during the period 1991 to 1995. This paper reanalyzed transc
ribed interviews from 145 participants. Using ''expected cost savings
achieved'' as an indicator of success, five best practices were identi
fied in the case companies. First, selective outsourcing decisions had
higher success rates than total outsourcing or total insourcing decis
ions. Second, senior executives and IT managers who made decisions tog
ether had higher success rates than either stakeholder group acting al
one. Third, organizations that invited both internal and external bids
had higher success rates than organizations that merely compared exte
rnal bids with current IT costs. Fourth, short-term contracts achieved
higher success rates than long-term contracts. Fifth, detailed fee-fo
r-service contracts had higher success rates than other types of fee-f
or-service contracts. The critical elements of three contracting model
s the described: fee-for-service contracts, strategic alliances/partne
rships, and buying-in of vendor resources. When the practices generate
d from the case studies are compared with current practices, we begin
to understand which practices are proving robust and why new practices
emerge. For example, in the participating companies, the rhetoric of
a ''partnership'' was misused to describe contracts that are actually
fee-for-service contracts. Today practitioners who understand the inhe
rent conflicts in fixed fee-for-service contracts are demanding what t
hey perceive to be more favorable contracting options, such as flexibl
y-priced contracts, performance-based contracts, and strategic allianc
es based on shared risks and rewards. This analysis reconciles some of
the apparent discrepancies in past findings about the best ways to so
urce IT.