Measuring and Evaluating Efficiency on IT Outsourcing operations through Data Envelopment Analysis

Measuring and Evaluating Efficiency on IT Outsourcing operations through Data Envelopment Analysis

João Correia dos Santos (Department of Management Science, Instituto Superior Técnico, Lisbon, Portugal) and Miguel Mira da Silva (Department of Computing Engineering, Instituto Superior Técnico, Lisbon, Portugal)
Copyright: © 2016 |Pages: 20
DOI: 10.4018/ijeis.2016010101
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Abstract

Information Technology (IT) outsourcing is a set of IT services that require providers to manage a long relationship with multiple services that have a high degree of variance between clients. IT outsourcing operational contexts display multi-input and multi-output variables, so managers need guidance on developing suitable approaches in order to identify the set of variables to analyse. This work proposes a model based on Data Envelopment Analysis (DEA), which is a linear programming technique able to manipulate multiple inputs and outputs. DEA allows the identification of the most efficient operation, which in turn enables providers to set the best operational strategy to follow. The results demonstrate the importance of quantitative measures in a dynamic business environment like IT outsourcing. To develop the authors' research, design science research was applied, and eighteen IT outsourcing contracts were used to demonstrate their model's utility. This work is a major contribution for measuring efficiency in IT outsourcing operations.
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According to Stern (Stern & Deimler, 2006), “One of the primary tactical decisions a manager must make is how performance will be measured.” Performance measurement can be defined as the process of quantifying the efficiency and effectiveness of actions. Thus, the measurement function is to develop a method for generating a class of information (metrics) that will be useful in a variety of problems and situations (Neely, Gregory, & Platts, 2005).

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