How to steer the IT outsourcing provider?

IT executives entering into information technology (IT) outsourcing arrangements seek various strategic, economic, and technological benefits. However, although several cases of IT outsourcing are considered successful, cases of failure can also be observed. Problems and challenges associated with IT outsourcing often not only relate to the strategic decision whether or not to outsource, but to the operational level as well. Especially organizations with little experience of implementing larger IT outsourcing programs face problems with the steering of external outsourcing providers.

In a recent research project, we developed a reference framework that structures the required processes for an effective steering of IT outsourcing relationships. Furthermore, it includes contextual factors that should be taken into account when implementing those steering processes (see figure below).

Reference Framework of IT Outsourcing Steering Processes

The research was based on the design science paradigm in information systems research. In a first step, we derived a framework from related literature and knowledge in this particular area. We then undertook extensive fieldwork, including expert interviews and field studies to evaluate our framework and to develop it further. The resulting framework proved to be a viable instrument to support the systematic analysis of current processes and the definition of suitable target processes for the steering of IT outsourcing programs. This research project’s primary contribution therefore lies in providing an applicable instrument for practitioners as well as in extending the existing body of knowledge on IT outsourcing governance.

The research results have recently been accepted for publication:
Urbach, N. and Würz, T. (2012) How to Steer the IT Outsourcing Provider - Development and Validation of a Reference Framework of IT Outsourcing Steering Processes, Business & Information Systems Engineering (BISE), 4, 5,  247-259. (Link)