DoesDombergerICIS.ppt

Lecture 1 Testing Domberger ICIS 2002 Does Domberger’s Theory of ‘The Contracting Organization’ Explain Satisfaction with IT Outsourcing?(ICIS 2002: Wed 18 Dec 02) Overview: Why this study? IT outsourcing is an important method of managing IT service delivery. (e.g., EDS revenue 2001: US$21B) Many studies of IT outsourcing (including our survey, slides 23 and 34 this presentation) have identified huge lists of reasons for and against outsourcing. Domberger’s book The Contracting Organization: A Strategic Guide to Outsourcing, Oxford University Press, 1998, offers a potential way of reducing the benefits to four simple factors. We had good data. Domberger’s model demanded testing! Domberger’s (1998:51) “benefits of contracting” Results (Australian orgs, Nov99-Feb00) This presentation Why do firms outsource IT? Brief survey of the literature Domberger’s four “benefits of contracting” Model based on Domberger’s “theory” Testing the model Data used for the analyses Factor analyses Regression analyses Conclusions and Limitations The literature: Why do organizations outsource IT? Loh and Venkatraman (1992) propose and test a model of when firms outsource based on Compustat-style accounting ratios. Clark, Zmud, and McCray (1995) identify nine classes of benefits and five classes of cost that drive the IT outsourcing decision. Their factors are similar to many of those in the empirical part of the present paper. Lacity and Hirschheim (1995) argue that most cost reductions achievable through outsourcing can equally well be achieved by the in-house IT function if it is given freedom to reorganize. They present eleven generic cost reduction strategies that internal IS departments can implement to reduce costs. Grover, Teng and Cheon (1998) propose a contingency model of IT outsourcing based on four theories – resource-based theory, resource dependency theory, transaction cost theory, and agency cost theory – that they hope will “provide guidance in examining the v