Achieving Success and Innovation in Global Sourcing: Perspectives and Practices

Enterprise systems offer the potential of integrating corporate functions as well as enabling business process improvements. These systems can be deployed in three different software sourcing modes: in-house, on-premises, and on-demand. This study examines whether software sourcing gestalts, i.e., combinations of IT resources and organisational resources involved, are able to absorb changes in the firm’s environment. If this is the case, the prevailing gestalts of IT and organisational resources parsimoniously “fit” the chosen software sourcing mode in response to changing forces in the firm’s environment.

Strategic sourcing recognizes that procurement is not just a cost function, but supports the firm’s effort to achieve its long-term objectives. Strategic sourcing has become a critical area of strategic management that is centered on decision-making regarding an organization’s procurement activities such as spend analysis, capability sourcing, supplier selection and evaluation, contract management and relationship management. Many companies face challenges in obtaining the benefits associated with effective strategic sourcing. From an organizational perspective, procurement data management is a core organizational challenge for chief procurement officers (CPOs) for fact-based strategic sourcing decision-making. To address this challenge, we define research objectives to design a holistic view on strategic sourcing orientations and to develop a conceptual basis for enabling centralization of procurement data and enabling the systemic exploration of sourcing alternatives. From a service ecosystem perspective as a holistic view on strategic sourcing, we define a model driven approach to explore sourcing alternatives based on a common language (C.A.R.S) that enables companies to achieve procurement data management and analytics competencies for fact-based decision-making.

An underlying assumption in the literature on inter-firm contracting has been that relational governance is better than formal controls at mitigating contractual hazards. If formal controls are at best inadequate and at worst useless, then it are hard to reconcile the practical observation that most firms continue to write detailed contracts that include a rich set of formal controls.

Formal controls weaken under two conditions: first, conventional, accounting-based performance measures are not effective when uncertainty is high. Second, as parties accumulate contracting experience “specialized language develops” enabling less expensive options than formal ones. We therefore question the logic that formal controls can only be useful if they strengthen relational governance.

In this paper, we posit that noisy performance measurement problem continues to exist in relational contracting as well as in formal contracting. And the purpose of such contractual controls therefore lies in mediating experience and contract design.

Relationship quality dimensions like trust or commitment have been proven to be crucial determinants for the success of outsourcing arrangements. Most previous empirical studies focus on the success of relationship quality dimensions within a specific contextual outsourcing arrangement. We argue that the importance and formation of each relationship quality dimension highly depend on the contextual background of the particular study. To substantiate this contingency argument, we conducted 16 interviews with managers in different types of outsourcing arrangements and questioned them about their understanding of relationship quality. Linking managers’ statements with their outsourcing background, we found several configurational patterns that describe the different roles of relationship quality for successful outsourcing.

This paper focuses on how different aspects of social capital facilitate or prevent clan control in two related inter-organizational system (IOS) projects during the projects’ four years life span. We observed the building of social ties in the projects and tried to understand how trust is build or destroyed in large teams, which are organizationally and physically separated, but need to work together for an extended period of time. The data for this qualitative study was collected from two large IOS projects. We analyzed how the social capital helps us to interpret the process of building clan control in an IOS project. We found out that clan control is difficult to achieve and the organizations need to be aware of ways of building social capital and be able to build and maintain social capital across organizational borders to succeed in such projects.

Outsourcing of information technology has substantially increased in the last two decades but doubts about the business success of such arrangements persist. This paper examines whether a difference in business performance can be determined between firms that outsourced information technology in a given period and those that did not. We compare four performance key figures before and after outsourcing. The data cover deals executed in Germany from 2000 to 2006 and key figures from 1997 to 2008. The results show that a significant difference can be observed for only two out of four key measures. However, while the cost savings of firms that outsourced information technology are not impressive compared to other firms on average, they often show a superior financial performance indicating that they seem to enjoy strategic benefits from the move.

Contemporary information systems development (ISD) is often conducted in a multi-stakeholder network where parts of the development are offshored. This entails several risks and challenges as inter-organizational boundaries get blurred and relationships become complex. Knowledge transfer (KT) is especially difficult; however, it has not been thoroughly studied from the network’s perspective. This interpretive case study investigated why KT between onshore vendor and offshored unit is difficult in the ISD network. Numerous KT challenges were found and organized into four categories. In addition, some root causes were identified, including the nature of knowledge to be transferred, inappropriate systems development methods, the number of middlemen, and political issues. The study contributes to research by confirming insights from the literature on KT and also providing novel issues unique to a networked perspective. For practitioners, this study shows some potential issues to be considered when planning how to organize the outsourcing or offshoring of their systems development.

The themes of performance and outsourcing have been the subjects of extensive studies in academic literature for a long time. Literature has explored a variety of control structures and practices, as archetypes of management control within and between organizations, with the aim of identifying the optimal control design. The design of management control in ITO becomes part of a general problem of effective governance structures and the role of accounting information. However, many accounting related aspects remain unexplored.

We explore in this paper the “lateral processing of information” [1], trying to move beyond the static concept of control, adopting a dynamic view, with the aim of better taking into account both the evolution and change of the outsourcing relationship as well as the factors that have influenced this process. Our empirical study focuses on the outsourcing relationship between a public healthcare organization, in Italy, and its supplier. This case highlights how a management control system acts as a mechanism that facilitates to mediate, shape and construct outsourcing relations through self-regulating and orchestration mechanisms.

Research on innovation offshoring (IO) has increased substantially over the last decade. IO is (still) widely regarded as the domain of multinational enterprises. Even though more and more researchers are claiming that small and medium-sized enterprises (SMEs) also practise IO, so far, the particularities of SMEs have been widely neglected. This is unfortunate, since a small business is not a little big business and thus most of the IO research lacks generalizability to SMEs. This study uncovers the gap and extends the empirical evidence available from scientific publications, obtaining a more current and accurate picture of IO research on SMEs. We directly approached academic experts through an online survey to collect information regarding the specific characteristics of SMEs relevant for IO, managerial needs arising from those characteristics and theoretical approaches appropriate to framing SME-specific IO research. This study provides a toolkit and roadmap for subsequent IO research aimed at SMEs.

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.

Multi-sourcing has emerged as an important pushing force on the global growth of ITO contracts. However, most of our understanding in various aspects of ITO still derives from dyadic client-vendor relationships. With a single case study on the ITO governance among a client and its two suppliers, I strive to increase the understanding on governance in the specific context of multi-sourcing. Departing from the theoretical framework aligning governance mechanism and governance structures, the case analysis reveals the diverging perception and practice of governance, which have caused the tension and conflicts among the multi-sourcing participants. With implications on both theory and practice, the findings shed lights on the understanding of conflicts and restructuring of supplier relationships in multi-sourcing situation.

For over a decade, dedicated E-markets have been facilitating globally distributed systems development by enhancing the traditionally high-risk global sourcing processes. At the same time, the success and potential of E-markets for sourcing project globally can be questioned, as E-markets embody a variety of temporal, geographical and socio-cultural gaps. To study the effectiveness of the mechanisms offered by the E-markets, we ran a field experiment in which four development teams worked for 10 weeks to have a software development product designed, programmed and tested by remote developer(s) using an E-market. Three out of the four teams managed to deliver a successful product within time and budget. This result exceeded our expectations and contradicts the critical observations and opinions in several blogs and news articles. We find that for effective e-Market sourcing a skilled customer team with competences including vendor selection, software contracting, software requirements specification, development methods, cross-cultural and virtual communications, use of various cloud based tools, frequent functional and non functional testing are necessary.

This chapter proposes a model how to setup IT supported interorganisational collaboration in the current world where IT and business collaboration is intertwined. Businesses have been struggling to achieve supply chain integration for both technical and organizational reasons. This hinders effective collaboration with partners: vertical collaboration with suppliers and customers, as well as horizontal collaboration with competitors. This paper gives a literature overview of the current challenges within supply chain collaboration. The suggested Enterprise Connectivity Interface approach is inspired on the popular API model that enables connectivity between software systems. We reflect how such quick connectivity can be applied also on a business level.

There is a growing corporate interest in IT energy efficiency. This will potentially impact also outsourcing decision making. In infrastructure, suppliers are focusing on increasing the IT energy efficient of their solutions. In this research 166 Dutch IT executives indicated the importance of IT energy efficiency in outsourcing decision making for infrastructure services. Is IT energy efficiency a decisive selection criteria in outsourcing decisions? The expectation is that the importance of IT-energy efficiency in outsourcing decisions increase for organization with a larger revenue, with a larger revenue outside the Netherlands, with a larger revenue outside the Europe, with a larger IT spend and larger external spend of organizations. In this research also test the expectation the importance of IT-energy efficiency in outsourcing decision making, is larger for organizations which apply for European tendering than for organizations which don’t apply for European tendering. The expectations are tested by the Chi-squared test and the Cochran-Armitage test for trends. In additional to the statistical tests also survey data is qualitatively analysed. The data indicates the importance of IT energy efficiency in outsourcing decision making as 37 % of the organizations of the respondents include IT energy efficiency in outsourcing decision making. In one out of four organizations IT energy efficiency was discriminator in the selection of the infrastructure services supplier.