Outsourcing information systems: drawing lessons from a banking case study

Abstract

Financial and costs benefits are often put forward as the reasons why organisations decide to outsource. Emerging patterns and trends indicate that today's outsourcing decisions are often motivated by factors other than cost. Thus, the decision-making process is more complex than it may at first appear. This paper presents findings from a case study from an organisation in the UK banking sector that was motivated to outsource aspects of its information technology/information system (IT/IS). The underlying motives and decision-making process that influenced the bank outsource its IT/IS are presented and discussed. Findings from the case study suggest political perspectives, as well as human and organisational issues influenced the bank's strategic decision-making to outsource certain aspects of its business. An examination of the case study findings suggests that cost alone is not always responsible for decisions to outsource, as it was found the bank's outsourcing decision was driven by a series of complex, interrelated motives in a bid to reduce the risks and uncertainties of managing its own technology. Considering the complex nature of the outsourcing process a frame of reference that can be used to assist managers with their decision to outsource IT/IS is propagated. The case study is used to present an organisation's experiences as to how and why it decided to outsource its IS and thus offers a learning opportunity for other organisations facing similar difficulties. In addition, the case study findings highlight the need to focus greater attention on discriminating between the short and long-term consequences of IT/IS decision-making. European Journal of Information Systems (2001) 10, 15-24.

Information systems outsourcing reasons in the largest Spanish firms

“…We found the handicap that field studies based on surveys on IS outsourcing do not proliferate, case studies being more common (Aubert, Rivard & Patry;Baldwing, Irani & Love, 2001;Huber, 1993;Kern & Willcocks, 2000;Lacity & Hirschheim, 1993a;1993b;Lacity & Willcocks, 1997;Lacity, Willcocks & Feeny, 1996;Loebbecke & Jelassi, 1999;McLellan, Marcolin & Beamish, 1995;Palvia, 1995;Willcocks & Choi, 1995;Willcocks, Fitzgerald & Lacity, 1996;Willcocks, Lacity & Kern, 1999). However, on the basis of literature on this matter (Arnett & Jones , 1994;Clark, Zmud & McCray, 1995;Collins & Millen, 1995;Corbett, 1994;Grover, Cheon & Teng, 1994) we prepared a questionnaire draft, which was later subjected to a pilot test and a pre-test.…”

Determinant Factors of Cloud-Sourcing Decisions: Reflecting on the IT Outsourcing Literature in the Era of Cloud Computing

“…To include only outsourcing types that are comparable to sourcing decisions concerning one of the three cloud service models (IaaS, PaaS, and SaaS), we included only articles that investigate selective outsourcing of at least the maintenance and operation of the hardware or software of any functional information system to an external provider while keeping the business process itself in-house. Therefore, we excluded, for example, research focusing on software development, help desk, desktop maintenance, or business process outsourcing, as these types of outsourcing are specific in terms of the associated managerial problems, required capabilities, and implications for the workforce (Lacity and Hirschheim, 1993b;Baldwin et al, 2001;Wholey et al, 2001). For studies that investigate the outsourcing of multiple functions and that distinguish their results according to outsourced functions, we referred to the subsample and results of the outsourced function that is similar to CC (e.g., we used the subsample of 'system & data center operations' in Dibbern and Heinzl (2009)).…”

“…Transferring risks to vendor: The benefit of transferring risks associated with owning and maintaining IT to the vendor (e.g., Baldwin et al, 2001) Trustworthiness: The degree to which a client can place trust in a provider and remain confident that the trust shall not be betrayed (e.g., Berg and Stylianou, 2009).…”

Information systems outsourcing reasons and risks: a new assessment

“…The provider can access more advanced technologies and count on more motivated staff and better management systems in order to be able to achieve a better service coordination or control, or, simply, is more strongly committed than the internal staff to make the alliance with the client work properly (Clark, Zmud and McCray, 1995). At least in theory, firms outsource so that they can have at their disposal high-quality IT services and knowledge (Baldwing, Irani and Love 2001;Lee, Huynh and Hirschheim, 2008).…”