IS outsourcing management compIS outsourcing management competence dimensions: instrument deetence dimensions: instrument development and relationship explovelopment and relationship explorationration

IS outsourcing management compIS outsourcing management competence dimensions: instrument deetence dimensions: instrument development and relationship explovelopment and relationship explorationration

報告者報告者 : : 林韋成林韋成指導指導 :: 王育民教授王育民教授

outline• Abstract• Introduction• Theoretical perspectives on IS outsourcing• Is outsourcing management competence

dimensions and their relevance theoretical perspectives

• Research methodology• Discussion• Conclusion

Abstract• Three theoretical perspectives

were applied to explain the nature of the IS outsourcing phenomenon

• Some measures were generated• Test proposed competences and

measure

Introduction• IS outsourcing related costs, risks , and

pitfalls. So firms need to have management ability to control them.

• Firms should be able to accurately measure IS service performance both before they sign the contract and throughout the process.

Theoretical perspectives on

outsourcing• An inter-organizational process

based perspective• A knowledge management based

perspective• An economics based perspective

An inter-organizational process based perspective

• A model for a seller-buyer relationshipdevelopmental process consisting of four

stage: awareness, exploration , expansion, commitment , and dissolution.

by Dwyer et al

An inter-organizational process based perspective

• The development and evolution of a cooperative IOR as consisting of a repetitive sequence of negotiation , commitment , and execution stages. By Ring and Van de Ven

A knowledge management based perspective

• Integrate knowledge is insightful andmeaningful in post-industrial society.

• Outsourcing is a part way of that firms assemble knowledge from suppliers.

An economics based perspective

• Transaction costs economics - technological uncertainty - asset specificity• Agency theory - non-separability of performance among

team members - task programmability

Is outsourcing management competence dimensions and their relevance theoretical persp

ectives• Informed buying• Contract facilitation• Contract monitoring• Vendor development

Informed buying and its relevance to theoretical

perspectives• Analyzing the external IS service market• Selecting a sourcing strategy• Solve technology issues• Leading the tendering , contracting , and

services management processes.

By Feeny and Willcocks

Contract facilitation, contract monitoring, and their relevance

to theoretical perspectives

• Contract facilitation is an action-oriented competence with a purpose to manage contract negotiation execution , and conflicts resolution.

by Feeny and Willcocks

Contract facilitation, contract monitoring, and their relevance to theor

etical perspectives• Effective contract monitoring means

holding suppliers to account on bothexisting service contracts and developingperformance standards of the servicesmarket by Feeny and Willcocks

Their relevance to theoretical perspectives

• Closely relate to negotiation , commitment and execution

• Generate many opportunities• Establish a field for knowledge

creation and integration

Vendor development and its relevance to theoretical

perspectives• Organizations looking beyond existing

contractual arrangements to explore thelong-term potentials for suppliers to create win-win situations in which the supplier increases revenues by providing services that increase business benefits. By Feeny and Willcocks

Is outsourcing management competence dimensions and theoretical

perspectives

Research methodology• Item generalization• Field interviews • Pretest• Pilot study• The large scale study• Convergent validity• Composite factor reliability• Discriminant validity• Predictive validity• Relationship exploration and empirical examination

Item generalization• Items were generated based on

literature• Due attention was paid to content

validity by making sure that measurement items covered the content domain of a theoretical construct.

Field interviews• Two directors and one quality director• 1h to over 2h• Measurement items were used to

explainthe meaning of IS outsourcing at an operation level

• The effectiveness and efficiency of the IS outsourcing services

• the capability of the firm to absorb new technologies after outsourcing.

Pretest • A pretest was implemented to refine

measurement items by presenting the questionnaire to two dissertation-stage Ph.D. candidates, two IS professors, one operation management professor, and one IS director.

Pilot study• Five hundred names were randomly select

ed from a name list provided• CITC was used to purify the measurement i

tems, and Cronbach alpha was used to test the reliability of the measurement items

• Items are deleted iteratively if their CITC scores were below 0.5.

• A higher than 0.70 for alpha was also pursued in maintaining or deleting item

The large scale study• Two sets of surveys were administered in the US, each havin

g several waves of surveys with 2 or 3 weeks• Three hundred phones calls were made to find why IS direct

ors and managers had not responded• There were 82 useful responses from the first set of mailings

and 123 from the second set of mailings• One hundred ninety eight were returned without responses.

The effective response rate was thus 205/ (3425-198) = 6.35%.

The large scale study

The large scale study• that respondent bias did not exist in the data• Exploratory factor analysis (EFA) was applied to investigate t

he relationship between proposed measures and competence dimensions

• Then confirmatory factor analysis (CFA) was applied to verify reliability and validity

• EFA assumes that measurement tems’ errors are uncorrelated and it cannot test whether all these dimensions together form second-order factors

• CFA takes item error correlations into consideration and thus may reveal more complex relationships embedded in the items.

Large study results• All the factor loadings are greater tha

n 0.4, which are significant with a sample size around 200

• Kaiser–Meyer–Olkin (KMO) is 0.89, which is outstanding

Large study results

Large study results• After the exploratory factor analysis, the co

nvergent validity of each dimension was going to be tested individually by checking their LISREL model fit indices and average variance explained (AVE) values.

• Discirminant validity of all derived dimensions was tested by comparing two LISREL models.

Convergent validity• LISREL be used• AVE be measured the ratio between t

hevariance captured

• All the AVEs are well above 0.5,

Convergent validity

Composite factor reliability

Discriminant validity• any two of the nine dimensions was t

ested by comparing the chi-square values of the original

• all statistics demonstrate that discriminant validity were good for all pairs of dimensions

Predictive validity• If a construct has a significant relatio

nship with a performance criterion, then it is said to have good predictive validity.

Predictive validity

Relationship exploration and empirical examination

• Test of the co-variation model• Development of second order factors

of IS outsourcing management competence

• Relationships among second-order competence factors

Test of the co-variation model

• The co-variation model fit indices, l values, T-values

• all the l values are reasonably good and correlations among the nine dimensions were also significant

Test of the co-variation model

Test of the co-variation model

Development of second order factors of IS outsourcing management

competence• Three second-order factors, informed buyi

ng, contract management, and relationship management

• existing contract, efficient execution is the prerequisite for any degree of IS outsourcing success

• IS outsourcing contract development and enhancement is inevitable

Relationships among second-order

competence factors• Informed buying is the knowledge basis for

both generating a substantive guiding framework

• Contract management provides the structure and process based on which IS vendor, user, and IS staff relationships are managed

• establishing an appropriate social and intellectual atmosphere

An empirical test of the second-order factor

model• The existence of these second-order competence f

actors and their relationships were empirically tested using LISREL by checking the second-order model fit indices and the correlations among them.

• there are three second-order IS outsourcing management competence factors and they have continuously interacting relationships.

An empirical test of the second-order factor

model

discussion

• Contributions to research• Contributions to practitioners• Research limitations

Contributions to research

• understanding of IS outsourcing phenomenon by applying inter-organizational process, knowledge management, and economic perspectives

• Responding to a critique of its lack of operationalization

Contributions to practitioners

• the development and empirical confirmation of IS outsourcing management competence dimensions and factors provide an overview of the different IS outsourcing management competences

Research limitations• the use of only one key informant in each r

esponding organization• the low response rate, the fact that the de

mographics may influence the generalizability of the findings

• respondents may be sensing the inherent constructs via the ordering of questionnaire items and they may respond accordingly

Conclusion• As IS outsourcing becomes more criti

cal for both traditional industrial firms and new Internet players, firms need to understand IS outsourcing management competences and how to develop them.