What is Modular Dependency

Information systems (IS) outsourcing became a very common practice in developed and in emerging economies. Over 94% of Fortune 500 companies are outsourcing at least one major business function. Despite IS outsourcing's popularity, failure rates are high. Many remedies are proposed in the literature, but failure rate of IS outsourcing projects remains high. It seems these remedies turned out to be partially successful at best. This chapter presents an alternative, new perspective on how to avoid IS project outsourcing failures and explores the concept of modularity and normalized systems theory (NST) in relation to IS outsourcing projects. Such a new perspective, which originates from the system sciences, may add value to outsourcing risk analyses. A case study analysis of a failed IS outsourcing project has been conducted. This study illustrates how the concept of modularity and normalized systems theory can be applied ex ante in order to mitigate the risk factors in IS outsourcing projects.