The Sourcing of Application Software Services: Empirical Evidence of Cultural, Industry and Functional Differences PDF
Preview The Sourcing of Application Software Services: Empirical Evidence of Cultural, Industry and Functional Differences
InformationAge Economy EditorialBoard H.U.Buhl W.Konig R.M.Lee H. Mendelson A. Picot B.Schmid R.Wigand Information Age Economy F.Rose The Economics,Concept, and Design ofInformationIntermediaries 1999,ISBN 3-7908-1168-8 S.Weber InformationTechnologyinSupplier Network 2001,ISBN 3-7908-1395-8 K.Geihs,W.Konig and F.vonWestarp (Eds.) Networks 2002,ISBN 3-7908-1449-0 F.vonWestarp ModelingSoftwareMarkets 2003,ISBN 3-7908-0009-0 D.Kundisch New Strategiesfor FinancialServices Firms 2003,ISBN 3-7908-0066-X T.Weitzel EconomicsofStandards inInformation Networks 2004,ISBN 3-7908-0076-7 Jens Dibbern The Sourcing of Application Software Services Empirical Evidence of Cultural, Industry and Functional Differences With 21 Figures and 27 Tables Springer-Verlag Berlin Heidelberg GmbH Dr. Jens Dibbem Universitat Mannheim Lehrstuhl fur Wirtschaftsinformatik 1 Schloss S 135 68131 Mannheim Germany [email protected] ISBN 978-3-7908-0217-7 ISBN 978-3-7908-2704-0 (eBook) DOI 10.1007/978-3-7908-2704-0 Zugl. Diss., Univ. Bayreuth, 2003 Cataloging-in-Publication Data applied for A catalog record for this book is available from the Library of Congress. Bibliographic information published by Die Deutsche Bibliothek Die Deutsche Bibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data is available in the Internet at http://dnb.ddb.de. This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag Berlin Heidelberg GmbH. Violations are liable for prosecution under the German Copyright Law. springeronline.com © Springer-Verlag Berlin Heidelberg 2004 Originally published by Physica-Verlag Heidelberg in 2004 The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Softcover Design: Erich Kirchner, Heidelberg SPIN 10998564 88/3130 - 5 43 2 1 0-Printed on acid-free paper To my Parents Preface Outsourcing hasbeen oneofthe most controversiallydiscussed topics inthe infor mation systems(IS)management field within the lastdecade. Whilesome organi zations havebeenquicktoadoptoutsourcing,others havebeenslowtoconsiderthis sourcingoption. Still others haveevaluated outsourcingbutadopted insourcing in stead.Inother words,organizations appear tobehavetotallydifferent inthe sourc ing oftheir IS tasks. There are no generally accepted practices, e.g., outsourcing certaintypesofISserviceswhilekeepingothers in-house.Thesourcingdecisionap pearsto behighly dependentonthe specific situation ofeachorganization. Recognizing theunique context ofeach organization,thisbook presents anempiri cally tested model that can be used to analyze the options ofIS insourcing versus outsourcing ofevery organization.The model takes into account the unique IS re quirements and the differences between insourcingand outsourcing at both the in dividual (i.e., worker) andthe organizational level. The development ofthe model isguided by the following question: Why do some organizations wholly or partially outsource particular ISfunctions while others keepthemin-house?Thisresearchquestion,iscloselyrelatedtooneofthemostfun damental questions ineconomicsandbusinessadministration:The question ofwhy firmsexistatall,i.e.whynotallofthemultitudeoftasksthatarerequired toproduce certain products and services are performed by individual companies (or persons) whodealwitheach otherbasedoncontractualarrangements- asitwasproposedby Adam Smith inhis 'WealthofNations' in 1776. Obviously, there are certain situations where economic actors find it useful or ad vantageous to organize themselves under one common umbrella, called organiza tion(e.g.,acompanywithan independentlegal form),ratherthan buildinganet of contractual relationships between eachother.Insearching forsuchageneral theory ofthe(existenceofthe)firm,itsoonbecame apparentthattherearevarious different explanatoryapproaches intheliterature andthatnoneofthem appears tosatisfacto rilyandexclusivelyexplain why organizations exist atall. Itistherefore oflittlesurprisethatresearch on ISoutsourcingturned outtobevery fragmented aswell. Many different theoretical lenses have been applied to address the factors and processes that explain why firms outsource IS functions. This, ac companiedwith a number ofissuesthat make the context even morecomplex,like the fact that particulartheories were applied differently,that different research ap proaches were usedtoexamine sourcingdecisionsandrelationships,thattheunitof analysis(i.e.,theISfunction)wastreated very differently,andthatthephenomenon wasstudied invarious organizationalsettings(e.g.,different countriesandbusiness types,such as industriesandpublic versusprivate organizations)has leadto alack ofgenerallyagreed uponknowledgeabout the ISoutsourcingphenomenon. viii Preface Accordingly, itisnowonderthat practitionersare faced with ahigh level ofuncer tainty about the sourcingofISfunctions and itswider implications. Itherefore feltthat the time was ripe to integrate existingresearch onthe theory of thefirm,onISoutsourcing,andongeneral decision making, andtocome upwith a comprehensivemodel. This model addresses the needs oftwopractitionergroups. First, ithelps client organizations to make better IS sourcing decisions. Second, it showsvendors whattheyneedtodoinordertoinfluence theevaluativeappraisalof potential and existing customerstowards outsourcingparticularISfunctions. Readers should recognize, however, that this model on IS sourcing is specifically developed to explain under which circumstances application services, including both thedevelopmentandmaintenanceofsoftware applications,areoutsourced.In otherwords, themodel would needtobeadjustedifusing ittoexplain why other IS functions, likesystems operations,thedesign andmaintenanceofthenetwork infra structure,orevennon-IS business functions, maybeoutsourced.Inparticular, read ers need to recognize the service nature of the application development and maintenanceworkwhich oftenrequires collaborativeeffortsbetweenvarious stake holders including users, different groups ofISprofessionals aswell as ISand non IS managers. Recognizing the focus ofthis study is particularly important when consideringthe empirical findings about thevalidityofthe ISsourcing model. The ISsourcingmodel isempiricallytested across two countries(Germanyversus USA), two industries(FinanceversusMachinery),and,asalready indicated, two IS functions (Application Development versus Maintenance). Altogether, data about the sourcing behavior of180 companies was gathered via a mailed questionnaire survey and systematicallyanalyzed. Some ofthe lessons learned from the model testing appear tobe generally applica ble, no matterwhat country, what industry, and what particularapplication service islooked at.Others arevalid only forGermany orthe US,fortheMachineryorFi nance Industry, and for the development or maintenance ofsoftware applications. This means that the sourcingcontexthas aprofoundimpact onthe ISsourcingde cision- an issuewildly ignored inprevious contributionsonISoutsourcing. I hope that both researchers and practitioners will benefit from the theoretical and empirical insights onthe ISsourcingphenomenonprovidedinthisbook, andIwish you happy reading! Acknowledgment Iwould liketoacknowledgewithgreat appreciationthecontributionsandassistance ofmany individuals that supported me inthe research process that finally resulted inthisbook.Firstandforemost,IwouldliketothankmyacademicadvisorProf.Dr. Armin Heinz\. During myinteractionwith himasastudent, Idiscoveredmyenjoy ment indoing researchand itwas Armin Heinzl who motivatedme to continuemy research with the creation ofa dissertation at his department. From then on, he thoughtfully guided my research efforts, encouraged me to write a proposal at the DeutscheForschungsgemeinschaft(DFG) and to submitpapers toconferencesand journals. Moreover, he enabled my visiting scholarship at the University ofHous ton, Texas, which gave methe opportunitytoget toknow two outstandingU.S.ac ademics that turned outtobecomehighly influentialonmyresearch. They areProf. Rudy Hirschheim, who recently moved on to Louisiana State Universityand Prof. Wynne Chin from UH. My conversations with Rudy have broadened my research perspectiveconsiderably.AlthoughRudy nevertold methat Ishouldtryalternative empirical research methods beside the quantitative approach, reading his research articles and talkingtohimneverthelessmotivatedmetostudy the ISsourcingdeci sion from a different perspective:that ofa participantobserverthat tries to under stand ISsourcingbyconductinginterviewswith decision makers intwelve German companies.Today,IcansaythattheknowledgethatIgainedthroughthis qualitative assessment was so valuable that I would never approach an empirical research projectwithoutspendingasignificantamountoftimeinthefield.Ontheotherhand, noperson hadagreaterinfluenceonmyunderstandingofcausal model buildingand testing than Wynne Chin. He was able to explain to me how theorizing, measure ment, and statistical data analysis techniques relate to each other- an issue that I could not find inany text book. Aforth academic who deservesspecial mentioning isProf. Dr.KUhlmann,whose dedicatedcommentson myquestionnaire helped me to improve my measurement instruments. Beside Armin Heinzl and Wynne Chin, he also took the burden to serve at my dissertation committee and to review my work. I greatly acknowledge the extra effort that this has caused for the three of them. Beyondthese credits tomyacademicadvisors, Iwouldliketoexpress mygratitude toanumberofpeoplethat also supportedmeduring my"dissertationtime".First, I thank mycolleaguesBirteAutzen, Franz Rothlauf,FrederickLoos,TobiasGrosche, andTorstenPaulussenaswellasmyformer colleaguesChristofGobel, LarsBrehm, Jurgen Gerstacker,Michael Zapf, Sigrid Mandel,Stefan Hocke, ThomasSchoberth, and WolfgangGuttierfornotonlybeing helpful andsupportiveinallmatters ofdai lywork life,butalso inestablishingasocial environmentthat has made mytime in Bayreuth and Mannheim very enjoyable. Second, I thank all ofthe students that worked forandwith me.Insupportingmeinorganizingthe2ndInternationalCon- x Acknowledgment ference onOutsourcingofInformationServices,held inBayreuthin200I, Iampar ticularly grateful to Andreas Gaube, Jan Herzhoff, Stephan Loffler,and Katharina Pfeuffer.Intheprocess ofgatheringthedataformydissertation,Iammuchobliged to Bastian Popp, Katrin Mullahy, Nicole Oemus, Stefan Wittenbeck, and Timo Berger. Third, I would like to thank Alexander Georgius, Anja Schumann, Silvia LeibbrandtandChristianNeunerforgreatly illuminatingmyresearch. Inthisrealm, I am also grateful to Jens Arndt, and Jessica Winkler for being conscientious and creativeeditors ofpartofmywork. Fourth, Iwould liketothank theteam attheIn stitute forSmall andMedium Sized FirmsattheUniversityofBayreuth (BF/M) for their support. Fifth,Ihighly appreciatethediscussionsthatIhadwithPeterGlanzel, the former CIOfromHeidelbergerDruck,andhisefforts inreactivatinghisnetwork ofrelationshipswith other ITmanagers tostimulatemysurvey response rate. The price that my partnerSabine paid forthis book was high. Nevertheless, she al ways exercisedpatience and supported me wherevershe could. Her pragmatic ad viseoften saved mefromloosing time andspace.This isjustoneofthereasons that make lifewith hersowonderful. Finally, Iwould like to express my gratitude and indebtednessto my parents.The book isdedicatedtothem. Mannheim,February2004 Jens Dibbern Table ofContents Preface vii Acknowledgment ix 1 Introduction 1 1.1 Problem Statement . 1.2 Research Focus andObjectives 4 1.3 Overview ofResearch Methodology " 6 1.4 Study Organization 6 2 TheoreticalFrameworkon Information Systems Sourcing 9 2.1 The Nature ofthe Information Systems Sourcing Decision .......... 10 2.1.1 Definition ofCoreConcepts. ............................ 10 2.1.1.1 Information Systems Function .................... 10 2.1.1.2 Sourcing ..................................... 13 2.1.2 MainComponentsofSourcing Decision ................... 15 2.1.2.1 The Phase-theorem............................. 15 2.1.2.2 Applyingthe Phase-theorem. ..................... 16 2.1.3 Framingthe Sourcing Decision intoaVariance Theory 20 2.1.3.1 Varianceversus ProcessTheory 20 2.1.3.2 Structural Elements ofaVariance Theory 22 2.2 Analysis and Selection ofTheoretical Lenses 23 2.2.1 Literature Review 24 2.2.1.1 Theoreticaland MethodologicalDiversity 24 2.2.1.2 TheoreticalChallenges 26 2.2.2 TheTheory ofthe Firm 27 2.2.2.1 Neoclassics,Industrial Economics and Gutenberg 31 2.2.2.2 Behavioralism 33 2.2.2.3 New InstitutionalEconomics 35 2.2.2.4 Dynamic Theories 39 2.2.3 From Innovation Diffusion toAttitude-BehaviorApproaches 41
The list of books you might like
