Influential Factors in IT Outsourcing Relationship in a Swedish Municipality: A Client and Vendor Perspective

Influential Factors in IT Outsourcing Relationship in a Swedish Municipality: A Client and Vendor Perspective

Andreea Daniela Pana Talpeanu (Department of Computer and Systems Sciences, Stockholm University, Stockholm, Sweden) and Lazar Rusu (Department of Computer and Systems Sciences, Stockholm University, Stockholm, Sweden)
Copyright: © 2017 |Pages: 17
DOI: 10.4018/IJIDE.2017070101
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Abstract

Information Technology Outsourcing (ITO) has generated considerable interest within Information Systems (IS) research as a consequence of its benefits in terms of cost efficiency and freedom to focus on core capabilities. This study covers the area of ITO in the public sector, specifically, in Swedish Municipalities where ITO has become a mainstream strategy. The influential ITO factors of the post-contract stage of an ITO relationship are examined and debated in light of existent research literature. The research is based on a case study of a Swedish Municipality and a direct IT vendor. A thematic analysis brings light upon three new ITO influential factors which are: (1) mutual understanding and long-term engagement; (2) Multi-sourcing, and (3) Communication between Municipalities, together with other seven factors present in the research literature that have an influence on the ITO relationship. The findings of this study can support ITO decision-makers from Swedish municipalities in improving the ITO relationship between their organizations and IT vendors.
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Introduction

Outsourcing has grown its roots from the overall need of companies to obtain semi-finished products, products or services from an external company instead of developing them internally (Dolgui & Proth, 2013). Information Technology Outsourcing (ITO) covers the decisions to shift the IT function or parts of it to external service provider(s) that would better succeed in aligning the IT processes to the organization’s business goals (Grover et al., 1998). Pearlson & Saunders (2009) have emphasized that the increasing costs in developing and sustaining the corporate IT function has determined managers in the 1970’s to turn to IT outsourcing. Since then, theoreticians have been struggling to identify the main factors that contribute to sustaining a good and productive relationship between clients and vendors in the outsourcing relationship process (Kern & Willcocks, 2001; Barthelemy, 2003; Kremic, 2006). The challenges of outsourcing IT come mainly from IT’s constantly rising importance in organizations and its shift from being a support tool to a strategic one (Pearlson & Saunders, 2009). Some specialists view IT as a non-core activity but still regard it as one of the most complex activities outsourced due to its critical effect on organizational processes and activities (Weinert & Meyer, 2005). Apart from the complexity of outsourcing IT, there is also uniqueness in engaging in such an activity due to the rapid pace of technological change and the organizations’ lack of in-house resources and capabilities to sustain this dynamism. With the growing popularity of IT outsourcing in the private sector, the public sector is rapidly emerging and seeking ways in which it can grasp the benefits of IT outsourcing. Since this is a rather new trend in public sectors, there are few researches that solely analyse or provide conceptual frameworks for this context (Chen & Gant, 2001; Maughan, 2003). Moreover, even with the existence of a plethora of theories in regards to IT outsourcing, it can be stated that there is a need for more research on the relationship between client firms and vendors in cross-sectoral ITO (Levina & Ross, 2003, Koh et al., 2004).

This paper tackles the direct ITO relationship between one Swedish Municipality and its IT vendor. The aim is twofold, to confirm and reinforce the existent ITO factors which impact the post-contract stage of the ITO relationship and to identify factors which have not yet received as much attention from the IT researchers and practitioners. To identify the factors influencing ITO relationships, this paper has chosen Alborz et al. (2003) model as opposed to other mainstream frameworks which will be further discussed. Alborz et al. (2003) have created a model which incorporates ITO factors in three different stages: (1) pre-contract, (2) contract, and (3) post-contract stage. This is the main reason for which this model was chosen. It offers an airplane view of the whole process which makes it easier to create a more narrow area of research. For example, this paper is interested in unveiling factors which impact the post-contract stage. For this reason, the authors have chosen the Alborz et al. (2003) model. The contributions of this research are twofold: (1) from a theoretical perspective, it provides three relatively new influential factors and enforces the influence of other existent factors in ITO relationship in the Swedish public sector organizations that can be further analysed and debated within IS research, and (2) from a practical perspective, it enables IT decision-makers to better understand the influential factors of a cross-sectoral ITO relationship in Sweden.

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