The impact of process standardization on business process outsourcing success

What is the impact of business process standardization on business process outsourcing (BPO) success? This paper argues that there is a direct impact of process standardization on BPO success, due to production cost economies, and also an indirect effect via improved contractual and relational governance resulting from better monitoring opportunities and facilitated communication and coordination. This threefold impact of standardization on BPO success is empirically confirmed using data from 335 BPO ventures in 215 German banks.     

An integrative model of trust on IT outsourcing: Examining a bilateral perspective

Trust has been considered a central aspect of successful IT outsourcing. Although a great deal of interest in trust has been described, there are very few theoretical models in the IT outsourcing literature to explain mutual trust, its role, and its impact in IT outsourcing. This study proposes a trust-based relationship research model to assess the perceived IT outsourcing success in terms of (1) mutual trust with its temporal dimension of initial trust and initial distrust, and (2) knowledge sharing with the moderating effect of mutual dependency. This model was then validated and applied in a study involving organizations in Korea. The data was collected and analyzed to understand initial trust, initial distrust, knowledge sharing, and mutual dependency as contributing factors to success in IT outsourcing. The results show that mutual trust between the service receiver and provider is very important for knowledge sharing and outsourcing success, and is affected by the initial perception to each other’s partner at the beginning of the outsourcing process. Interestingly, this study also shows that initial trust is considered a significant factor in the perception of mutual trust from the service receiver’s perspective, but not from the service provider’s viewpoint. The results help extend our understanding of critical success factors in outsourcing success and of different standpoints between the service receiver and provider.

The impact of IT outsourcing on information systems success

The objective of this research is to assess the impact of IT outsourcing on Information Systems’ success. We modeled the relationships among the extent of IT outsourcing, the ZOT (the Zone of Tolerance), and IS success. We justified our model using the expectancy–disconfirmation theory, the agency theory, and transaction cost economics, and we empirically tested it using structural equation modeling with responses from IS users. We found significant direct and indirect effects (through the service quality) of outsourcing on IS systems’ perceived usefulness and their users’ satisfaction. Whereas the extent of outsourcing is negatively related to the service quality and perceived usefulness, the ZOT-based IS service quality is positively related to the user satisfaction.     

Congruent patterns of outsourcing capabilities: A bilateral perspective

Despite the extensive proliferation of Information Technology Outsourcing (ITO), firms often obtain unsatisfactory outsourcing outcomes due to the lack of appropriate outsourcing capabilities of a client or their vendor. ITO clients strive to enhance outsourcing performance by establishing their own outsourcing capabilities as well as contracting with capable vendors to meet their strategic needs. Thus, for the success of an ITO project, it is imperative to find an effective combination of complementary outsourcing capabilities on both sides. However, knowledge of how to identify and develop a set of appropriate outsourcing capabilities of both client and vendor has yet to be developed. This study aims to fill this knowledge gap by elaborating on the configurational mechanisms of outsourcing capabilities from a bilateral perspective, which explicate how multiple types of client and vendor outsourcing capabilities combine into configurations simultaneously to produce high ITO performance. First, based on the ITO literature, we develop a conceptual framework that identifies three key types of outsourcing capabilities. Then, with the matched dataset collected from a client and their vendor, we conduct a fuzzy-set qualitative comparative analysis (fsQCA), which is a set-theoretic configurational method to investigate the systemic and holistic interdependencies among key outsourcing capabilities that produce high outsourcing performance. On the basis of the conceptual framework and empirical findings, we present four viable propositions to build configurations of client and vendor ITO capabilities that can achieve ITO success with theoretical and practical implications.     

IT outsourcing and firm-level performance: A transaction cost perspective

We analyzed the effect of the level of low asset specificity IT outsourcing on firm-level financial performance. We used transaction cost economics (TCE) as the theoretical basis to explain the effect of the level of network and telecommunication services outsourced on financial performance. An analysis of 1444 Integrated Healthcare Delivery Systems revealed that higher levels of network and telecommunication services outsourced were associated with superior financial performance. Specifically, each additional network and telecommunication service outsourced resulted in an average $3,120,000 in savings, a 25% increase in profit. In addition, increases in IT budgetary expenditures were found to be associated with increased financial performance. Our study provided preliminary support for the use of asset specificity to guide outsourcing decisions. In particular, IT activities that have become commodities (having ‘low specificity’) should be outsourced to improve the firm's financial performance.     

Understanding the outsourcing learning curve: A longitudinal analysis of a large Australian company

Outsourcing continues to capture the attention of researchers as more companies move to outsourcing models as part of their business practice. Two areas frequently researched and reported in the literature are the reasons why a company decides to outsource, and outsourcing success factors. This paper describes an in-depth, longitudinal case study that explores both the reasons why the company decided to outsource and factors that impact on success. The paper describes how Alpha, a very large Australian communications company, approached outsourcing and how its approach matured over a period of 9 years. The paper concludes that although a number of reasons are proposed for a company's decision to outsource, lowering costs was the predominant driver in this case. We also describe other factors identified as important for outsourcing success such as how contracts are implemented, the type of outsourcing partner arrangement, and outsourcing vendor capabilities.

A comparative study of important risk factors involved in offshore and domestic outsourcing of software development projects: A two-panel Delphi study

We investigated the risk factors of outsourced software development. Our first objective was to create empirically generated lists of risk factors for both domestically- and offshore-outsourced projects. Our second objective was to compare these two contexts: how do the risk factors change and which ones are most important in each. To address these objectives, we conducted two Delphi surveys to identify the important risk factors from a client perspective, in domestic and offshore settings. We qualitatively compared the results of the surveys to identify similarities and differences across their risk profiles. We identified three types of risks: those that appeared in both contexts; those that appeared in both but were exacerbated in the offshore context; and those that were unique to the offshore context. Our findings suggested that traditional project management risks were important in both contexts; however, the offshore context seemed to be more vulnerable to some traditional risks as well as factors that were unique to it.     

Inside the adaptive enterprise: an information technology capabilities perspective on business process agility

Recent innovations in utility computing, web services, and service-oriented architectures, combined with a growing array of IT skills, have improved firms’ ability to be more agile in responding to change. Using the resource-based view of the firm, prior research suggests that IT resources, in isolation, are unlikely to yield superior performance and so as firms try to boost their agility, the question becomes how to configure IT resources to prepare for, or react to, change. In this paper, we posit that managerial IT capabilities based on IT-business partnerships, strategic planning, and ex-post IT project analysis lead to the development of technical IT capabilities associated with a flexible IT infrastructure which in turn drives agility or a firm’s ability to react to change in its products and markets. Using data from matched surveys of IT and business executives in 241 firms, we find that managerial and technical capabilities affect agility. In further testing, we reveal that in a stable setting, technical IT capabilities are more important to agility than managerial IT capabilities, while in a dynamic setting, the opposite is true. Thus, for firms operating in volatile markets, effective models of managerial IT governance are essential for delivering superior agility or adaptiveness.

Strategic dependence on the IT resource and outsourcing: A test of the strategic control model

Using resource dependency theory (RDT), this research analyzes how organizations control their information technology resources to improve organizational performance. According to RDT, organizations must manage their dependency on external organizations and limit external dependencies when resources are considered critical. The current study proposes and tests a portion of a Strategic Control Model positing that managers seek to control important, strategic resources in order to create value for the firm and to avoid dependency on external entities. Utilizing a research design that captured extensive quantitative data on the control of IT functions and services, the research team gathered 5 years of data on 54 business units (BUs) in 27 global companies located in seven countries. Study examined the linkages of these 54 BUs to firm performance. Locating the Extent of Control within the firm in cases where the firm depends on IT as a strategic resource proves to be a good explanation for effective decisions leading to higher performance. Viewing IT as a strategic resource alone does not lead to positive business unit outcomes, but the moderating influence of Extent of Control is found to establish the complex statistical relationship with business unit performance. For these reasons, it is critical that a theoretically grounded firm-wide process for decisions on locating IT control is in place to capture business value.

Risks and benefits of business process outsourcing: A study of transaction services in the German banking industry

We developed a model of the adoption of business process outsourcing (BPO) based on risk–benefit analysis. The model was tested in the German banking industry in four areas of transaction processing. Our results showed that, in general, perceived BPO benefits have a substantially stronger impact on intention to increase the level of BPO than perceived risks. However, the experience that banks have with the BPO process, [whether already decided on BPO (Pro), still in the pre-decision phase (Neutral), or opted against BPO (Contra)], moderated the impact of factors affecting the perceived risks and benefits of BPO. Banks that opted for BPO were mostly driven by a desire to focus on their core business while considering financial risks. Banks in the neutral position had the most balanced view of risks and benefits, mainly financial and performance ones, and also focusing on the core business and increased business process performance. Those banks that decided against BPO mostly focused on benefits while the perceived risks were mostly formed by strategic and performance risks rather than financial ones. The results point out the path dependencies of the BPO decision.     

Assessing the success of e-government systems: An employee perspective

By using information system (IS) success-based approaches from the perspective of government employees, this paper investigates the success of e-government systems. Structural equation modeling (SEM) techniques were applied to data collected by a questionnaire from 154 employees of e-government systems in Serbia. In this study, we empirically evaluated the model for measuring the success of e-government systems consisting of constructs from the updated DeLone and McLean IS success model coupled with the demographic conditions. Seven out of ten hypothesized relationships between the seven success variables are significantly supported. The findings of this study can be used to assess the success of e-government systems from the standpoint of the government employees.     

Implications for strategic IS research of the resource-based theory of the firm: A reflection

This paper reviews key concepts from the resource-based theory (RBT) of the firm, including evidence of “empirical support” for RBT. However, the paper then turns the conventional logic of empirical testing of RBT on its head, and argues that all that empirical testing does is to show researchers’ success in identifying valuable, rare, inimitable, and non-substitutable (VRIN) resources. Examining the IS literature from this perspective, the paper identifies a number of resources that really do seem to have been sources of competitive advantage. It concludes with recommendations on how RBT should be used in future strategic IS research.     

When success turns into failure: a package-driven business process re-engineering project in the financial services industry

This article discusses a Business Process Re-engineering project that involved the implementation of an enterprise resource planning software package. Although the project was deemed to be a success when the system was first delivered, this initial success soon turned to failure. While the short-term financial results were spectacular, the long-term implications of the changes were more worrying. This paper raises many questions about the meaning of “success.” In particular, it shows how a “successful implementation” can, within a relatively short space of time, turn into failure.     

Evolution of the impact of e-business technology on operational competence and firm profitability: A panel data investigation

This study examines the evolution of the impact of e-business technology on operational competence and profitability using a panel dataset of 154 Spanish firms. We find that (1) e-business technology has a positive effect on operational competence that decreases over time and (2) the firm’s proficiency in exploiting a portfolio of operational capabilities has a positive impact on profitability that becomes more substantial over time. The findings provide some insights on how the initial and subsequent IT investments affect operational competence and profitability over time. This study methodologically illustrates how to perform a partial least squares estimation using panel data.     

IT capabilities and firm performance: A contingency analysis of the role of industry and IT capability type

Previous empirical studies examining the relationship between IT capability and accounting-based measures of firm performance reported mixed results. We argued that prior work has relied on aggregate overall measures of the firm's IT capability, ignoring the specific type and nature of IT capability; and also has not fully considered important environmental conditions that influence the relationship. Drawing on a resource-based view, we advanced a contingency perspective and proposed that IT capabilities’ impact on firm resources was contingent on the “fit” between the type of IT capability/resource a firm possesses and the demands of the industry in which it competes. Specifically, using publicly available rankings as proxies for two types of IT capabilities (internally and externally focused), we empirically examined the degree to which three industry characteristics (dynamism, munificence, and complexity) influenced the impact of each type of IT capability on measures of financial performance. After controlling for prior performance, we found there was general support for the posited contingency model. The implications of these findings are also discussed.     

The impact of legitimacy-based motives on IS adoption success: An institutional theory perspective

Firms frequently adopt new information systems (IS). To better understand IS adoption, research has been focused on motives for an IS adoption. In this study, three legitimacy-based motives (coercive, mimetic, and normative pressure) are examined for their impact on two success determinants (i.e., project management approach and team competence) and the subsequent impact of the success determinants on IS adoption success. In a quantitative study of Australian firms, we found that coercive pressure and normative pressure influence the project management approach, whereas mimetic pressure influences team competence. Both the project management approach and team competence in turn influence IS adoption success.     

The impact of the frequency of usage of IT artifacts on predevelopment performance in the NPD process

Responses from 152 managers from a wide range of industries were used to test a conceptual model examining the influence of information technology (IT) and non-IT resources on IT capabilities and their subsequent effects on predevelopment stage outcomes. It was found that the resources of IT infrastructure, IT embeddedness, firm's outward focus, and competitive intensity have varied effects on the frequency of usage of general-purpose and collaborative IT artifacts. Firms with higher levels of usage of collaborative artifacts in their NPD process have improved predevelopment stage performance, including the number of generated concepts and prototypes, and more efficient new product development (NPD) team collaboration.     

New capability indices for measuring the performance of a multidimensional machining process

Engineering tolerance plays an important role in the process capability analysis for determining whether a manufacturing process is capable of making good quality products. In contrast with the engineering tolerance region in a multivariate manufacturing process, the multidimensional machining process or the nano-cutting process has a special engineering tolerance called the positional tolerance. Positional tolerance is a special type of geometric dimensioning and tolerancing which describes the tolerance region between the actual location of machining results and the target location. In the past few years, several capability indices have been developed for measuring the performance of a multidimensional machining process under the assumption that the variances of machining results on different directions are equal. However, this assumption may not be true in most practical situations. In this paper, we propose three novel capability indices for measuring the performance of a multidimensional machining process under the assumption that the variances of machining results on different directions may not be equal. The statistical properties of the point estimators and their confidence intervals for the new capability indices are derived. Both the simulation results and numerical examples show that the new capability indices outperform the predecessors.     

The critical factors of success for information service industry in developing international market: Using analytic hierarchy process (AHP) approach

In the past few years, due to changes in industry structure, market and the saturation of the domestic market, information service firms have started to develop the international market. Hence, to continue running their operations and maintain profitability, they should effectively control the related factors in the development of targeting a market. The purpose of this paper is to find the critical operational factors of the information service industry in developing the market and to provide a referential framework for operations in the information service industry. This research is firstly base on the business model discussed in relevant literature, using cross-case study to observe different domains for the operational strategies and critical factors of those top information service companies combined with thorough interviews with their top management executives, experts, and consultants. Finally, we concludes by proposing six elements of business model and 20 critical factors for using AHP method, and also calculates the quantitative weight of those elements and factors. We also take typical commercial software companies for examples to analyze their strategies of entering the international market.     

A co-generic perspective on problems involving a shift between systems' different levels of analysis

A co-generic system is characterized by having processes, rather than entities, as its components. The aim of this paper is to present the concept of a co-generic system, elaborate upon its unique properties and demonstrate its power as an alternative epistemology for the study of non-mechanistic systems. By describing the unique properties of process-laden systems--co-generic systems--I aim to illustrate the simple and elegant basic process which is responsible for the shift between different logical levels of analysis, a shift which is evident in the emergence of higher order forms out of basic units. In this context, special emphasis is given to Gregory Bateson's theory.