IT Outsourcing Governance

Abstract

The overall objective of this chapter is to concentrate on the important issues of strategy, structure, and management of IT outsourcing arrangements. Using well-known theoretical perspectives described earlier in this book and experience earned from several business case studies in this book, we present a governance model for successful management of IT outsourcing relationships. IT outsourcing governance can be defined as specifying the decision rights and accountability framework to encourage desirable behavior in the IT outsourcing arrangement, where resources are transferred from one party to the other in return for resources controlled by the other party. Governance is not about making specific decisions — management does that — but rather determines who systematically makes and contributes to those decisions. Governance reflects broader principles while focusing on the management of the outsourcing relationship to achieve performance goals for both client and vendor. Governance is the institutional framework in which contracts are monitored, adapted, and renewed. Effective outsourcing governance encourages and leverages the ingenuity of the vendor’s and client’s people in IT usage and ensures compliance with both enterprises’ overall vision and values.