Outsourcing Information System: Client-Vendor Relationship Management
THE MANCHESTER METROPOLITAN UNIVERSITY
MSC PROJECT MANAGEMENT
MANAGEMENT INFORMATION SYSTEMS
Outsourcing Information System: Client-Vendor Relationship Management
12 Nov. 2012
CONTENT
Outsourcing Information System: Client-Vendor Relationship
1. Introduction
2. Relationship Management
2.1 Trust
2.2 Control
2.3 Power
3. Conclusion
4. Reference
1. Introduction
According to Martinsons (1993), “information systems outsourcing is the act of subcontracting all or parts of the IS function to an external vendor as an alternative to relying solely on in-house resources and capabilities.” As firms look to gain competitive advantage by cost cutting and focusing internal resources on core business activities, more and more companies have been forced to outsource its information systems despite the on-going debate over the business benefits and risks. Cullen et al. (2005) suggest that one of the core competencies of IS managers is the management of the relationship with the vendor. The debate concerning the merits of IS outsourcing is acknowledged, however this paper adopts the view that outsourcing is neither bad or good in itself, it is the management before and after the contract is sign which determines the outcome (Cullen et al., 2005).
The need to manage enduring client-vendor relationship has become more important as the pervasiveness of information system surge (Lee et al., 2003). Goo et al (2007) indicated that many clients contemplate switching vendors due to numerous reasons including: lack of satisfaction with the vendor’s performance, clashes based on typical agency problems, or different developing circumstances or needs. About 78% of client-vendor relationship fails in the long term (Mehta et al, 2010). A report by Cutting Edge Information Inc. (2002 cited in Webb et al, 2005:438) discovered that 40% of firms from difference industries were unhappy with their
MSC PROJECT MANAGEMENT
MANAGEMENT INFORMATION SYSTEMS
Outsourcing Information System: Client-Vendor Relationship Management
12 Nov. 2012
CONTENT
Outsourcing Information System: Client-Vendor Relationship
1. Introduction
2. Relationship Management
2.1 Trust
2.2 Control
2.3 Power
3. Conclusion
4. Reference
1. Introduction
According to Martinsons (1993), “information systems outsourcing is the act of subcontracting all or parts of the IS function to an external vendor as an alternative to relying solely on in-house resources and capabilities.” As firms look to gain competitive advantage by cost cutting and focusing internal resources on core business activities, more and more companies have been forced to outsource its information systems despite the on-going debate over the business benefits and risks. Cullen et al. (2005) suggest that one of the core competencies of IS managers is the management of the relationship with the vendor. The debate concerning the merits of IS outsourcing is acknowledged, however this paper adopts the view that outsourcing is neither bad or good in itself, it is the management before and after the contract is sign which determines the outcome (Cullen et al., 2005).
The need to manage enduring client-vendor relationship has become more important as the pervasiveness of information system surge (Lee et al., 2003). Goo et al (2007) indicated that many clients contemplate switching vendors due to numerous reasons including: lack of satisfaction with the vendor’s performance, clashes based on typical agency problems, or different developing circumstances or needs. About 78% of client-vendor relationship fails in the long term (Mehta et al, 2010). A report by Cutting Edge Information Inc. (2002 cited in Webb et al, 2005:438) discovered that 40% of firms from difference industries were unhappy with their
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