Outsourcing and Escalation Issues in VLITPs

Outsourcing and Escalation Issues in VLITPs

Matthew Guah (Erasmus School of Economics, The Netherlands)
Copyright: © 2009 |Pages: 16
DOI: 10.4018/978-1-59904-546-7.ch011
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Abstract

VLITP escalation has been documented to be a widespread phenomenon in the 21st century. Nearly every research in this area has portrayed escalation as an irrational decision-making process whereby additional resources are plowed into a failing project. This chapter examines the possibility that some of these escalation issues could be appropriately managed by avoiding irrational actions and rationally responding to various situations that may occur in a VLITP. Later on in the chapter, the author disperses popular belief that VLITP outsourcing is in the nature of partnership and strategic alliances. It exposes that VLITP outsourcing vendors do not share the same profit motives as the host organization who is meant to enjoy the benefits of the VLITP and therefore baring the full cost of the implementation. It further suggests that a tight contract is the only mechanism to ensure that expectations of the host organization are met. Host organizations must negotiate and agree that the contract contains a number key issues including a successful outsourcing relationship between the host organization and the outsourcing vendor.
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Possible Problems With Vlitp Outsourcing

When a host organization is reviewing a potential outsourcing contract involving a VLITP, few issues of potential problems should be investigated. The first issue of contention is usually making sure the organization (and not the outsourcing vendor) will end up owning the source code of any IT application resulting from the VLITP (Johnson, 1995). The contract must be flexible enough that the service being outsourced can change as the business changes (Mahnke et al, 2008). The project champion should be able to answer these simple questions:

  • Is there a system set up to gauge the success of this VLITP?

  • Is there a clearly defined—preferably one—person established as the liaison and can that person speak the language where the work is being done?

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