Critical Success Factors of Offshore Software Develpment Project: The Perspective of German-Speaking Companies

343 Pages·2006·23.868 MB·English

by  Martin Wiener (auth.)

Martin Wiener
Critical Success Factors fo erohsffO
Software Development Projects
GABLER EDITION WISSENSCHAFT
Martin Wiener
Critical Success Factors
of Offshore Software
Development Projects
The Perspective of German-Speaking
Companies
With a foreword by Prof. Dr. Michael Amberg
Deutscher Universitats-Verlag
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Dissertation Universit~it ,grebnrJ(N-negnalrE 6002
n2
.1 Auflage September 6002
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Umschlaggestaltung: Regine Zimmer, Dipl.-Designerin, Frankfurt/Main
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Printed ni Germany
ISBN-10 X-3940-0538-3
ISBN-13 1-3940-0538-3-879
Foreword
Why do projects succeed or fail? Can managers influence the outcome of a project? Are
there core indicators that are extremely important in reaching targeted goals, values and ex-
pectations? Nearly every manager responsible for a project has to deal with such questions
sooner or later. This is especially the case for projects that are innovative to an organization.
With the emergence of global communication technologies and driven by the desire of
corporations to take advantage of the lower costs of production and skilled labor in develop-
ing countries, the movement in German-speaking countries to export work offshore has ex-
perienced a notable rise in popularity. The offshoring of information technology and software
development has spawned an entire industry. Still, many offshore projects do not live up to
their expectations.
This book offers an enlightening and detailed analysis of the phenomenon of offshoring
software development and its critical success factors. The critical success factor approach al-
lows management to harness the organization's resources on those issues that will make a dif-
ference. It will help to focus attention on major concerns and guide businesses in creating and
measuring success.
Practitioners and researchers will herein find a valuable resource to better understand the
role of critical success factors in project management. It is our hope that managers will recog-
nize the potential benefits of deriving and applying critical success factors in their organiza-
tion and consequently realize improvements in managing offshore software development pro-
jects through this simple, yet powerful concept.
Michael Amberg
Preface
Many people have contributed to this doctoral thesis with support of many kinds: Through
practical help, suggestions of ideas, and editing. Foremost, I would like to thank my thesis
advisor Michael Amberg for his guidance and support over the past four years. I am also
grateful to my colleagues Doris, Manuela, Olga, Sonja, Shota, Steffen, and Ulrich for their
helpful suggestions and their sensitive copyediting of this thesis; my students Nadja, Chris-
tian, and Michael for their support during the state-of-the-art analysis, the implementation of
the case studies, and the conduction of the web survey respectively; Gerold Herold, Rudolf
Kodes, Roland Kraus, and Rolf Stephan for their ongoing support throughout this doctoral
research project; Michael Weber for his help in the process of finding company partners for
the conduction of the web survey; Mario Babini and Stefan Ziolkowski for their help with the
implementation of the case studies.
My thanks extend to Flo for helping me bring this thesis to its completion, as well as for
being a great friend over the last six years; Fips and Martin for being there for me whenever I
needed them; Daniel for supporting me during the final stages of my thesis and becoming a
good friend over the last years; Caro, Christiane, Jess, Sabine, Andi, and Stephan for taking
care of me; Ines, Julia, Holger, and the rest of their team for continuously providing me with
mocha coffee while working on this thesis; Kathi and Stephan for enabling me to relax after
long working days.
Last, but not least, I would like to thank my parents, Maria and Toni, to whom this thesis is
dedicated, for their unconditional love and support.
Martin Wiener
Short Index
Foreword .................................................................................................................................. V
Preface ................................................................................................................................... VII
Short Index ............................................................................................................................. IX
Index ....................................................................................................................................... XI
List of Tables ...................................................................................................................... XVII
List of Figures .................................................................................................................. XXIII
List of Abbreviations ...................................................................................................... XXVII
Chapter 1 Introduction ........................................................................................................ 1
Chapter 2 Research Design ................................................................................................ 13
Part A: Research Background .............................................................................................. 31
Chapter 3 State-of-the-Art of IT Outsourcing ................................................................. 33
Chapter 4 Management of Offshore Software Development Projects ........................... 61
Part B: Critical Success Factors of Offshore Software Development Projects ............... 113
Chapter 5 Identification of Critical Success Factors ..................................................... 115
Chapter 6 Analysis of Critical Success Factors .............................................................. 157
Chapter 7 Management of Critical Success Factors ...................................................... 193
Chapter 8 Conclusions ..................................................................................................... 251
References ............................................................................................................................. 267
Appendix A- Annotated Bibliography .............................................................................. 301
Appendix B - CSF Identification ........................................................................................ 305
Appendix C - CSF Analysis ................................................................................................. 309
Appendix D - CSF Management ......................................................................................... 319
Index
Foreword .................................................................................................................................. V
Preface ................................................................................................................................... VII
Short Index ............................................................................................................................. IX
Index ....................................................................................................................................... XI
List of Tables ...................................................................................................................... XVII
List of Figures .................................................................................................................. XXIII
List of Abbreviations ...................................................................................................... XXVII
Chapter 1 Introduction ........................................................................................................ 1
1.1 Motivation ................................................................................................................ 2
1.2 Research Focus ......................................................................................................... 8
1.3 Organization ........................................................................................................... 10
Chapter 2 Research Design ................................................................................................ 13
2.1 IS Research Paradigms and Methods ..................................................................... 14
2.1.1 Critical, Interpretive, and Positivist Research ......................................................................... 14
2.1.2 Quantitative, Qualitative, and Mixed-/Multi-method Research .............................................. 15
2.2 CSF Research ......................................................................................................... 18
2.2.1 Definition ................................................................................................................................ 18
2.2.2 Evolution ................................................................................................................................. 19
2.2.3 Dimensions ............................................................................................................................. 20
2.2.4 CSF Identification ................................................................................................................... 22
2.2.5 CSF Relevance ........................................................................................................................ 23
2.2.6 Benefits ................................................................................................................................... 23
XII Index
2.3 Research Strategy .................................................................................................. 25
2.3.1 Research Objectives and Questions ........................................................................................ 25
2.3.2 Research Paradigm .................................................................................................................. 25
2.3.3 Research Approach ................................................................................................................. 25
2.4 Trustworthiness of the Research ............................................................................ 28
2.4.1 Credibility ............................................................................................................................... 28
2.4.2 Transferability ......................................................................................................................... 29
2.4.3 Dependability .......................................................................................................................... 30
2.4.4 Confirmability ......................................................................................................................... 30
Part A: Research Background .............................................................................................. 31
Chapter 3 State-of-the-Art of IT Outsourcing ................................................................ 33
3.1 Definition ............................................................................................................... 34
3.2 History ................................................................................................................... 39
3.3 Theoretical Foundations ........................................................................................ 41
3.3.1 Agency Theory ........................................................................................................................ 43
3.3.2 Transaction Cost Theory ......................................................................................................... 43
3.3.3 Power and Politics Theories .................................................................................................... 44
3.3.4 Relationship Theories .............................................................................................................. 45
3.3.5 Social Exchange Theory ......................................................................................................... 45
3.3.6 Resource Theories ................................................................................................................... 46
3.3.7 Strategic Management Theories .............................................................................................. 46
3.4 Annotated Bibliography ......................................................................................... 47
3.4. l Classification ........................................................................................................................... 49
3.4.2 Comparison ............................................................................................................................. 51
3.5 Market .................................................................................................................... 55
Index XIII
3.6 Benefits .................................................................................................................. 59
Chapter 4 Management of Offshore Software Development Projects ........................... 61
4.1 Literature Review ................................................................................................... 62
4.1.1 Classification .......................................................................................................................... 62
4.1.2 Description .............................................................................................................................. 63
4.1.3 Comparison ............................................................................................................................. 67
4.2 Project Phase Model ............................................................................................... 71
4.3 Planning and Analysis Phase ................................................................................. 74
4.3.1 Definition of the Sourcing Strategy ........................................................................................ 74
4.3.2 Assessment of the Client Organization ................................................................................... 77
4.3.3 Identification of the Project Candidates .................................................................................. 78
4.3.4 Analysis of the Project Candidates ......................................................................................... 81
4.4 Decision and Negotiation Phase ............................................................................. 86
4.4.1 Selection of the Country ......................................................................................................... 86
4.4.2 Selection of the Provider(s) .................................................................................................... 88
4.4.3 Negotiation of the Contract ..................................................................................................... 93
4.4.4 Formulation of the Contract .................................................................................................... 95
4.5 Implementation Phase ............................................................................................ 99
4.5.1 Management of the Transition ................................................................................................ 99
4.5.2 Management of the Contract ................................................................................................. 101
4.5.3 Management of the Performance .............................................. . ........................................... 102
4.5.4 Management of the Communication ..................................................................................... 105
4.5.5 Management of the Cultural Differences .............................................................................. 108