Business & Management Studies

Abstract

The outsourcing of information systems and information technology (IS/IT) has become a prevalent practice in both developed and emerging economies, with the aim of achieving economies of scale and competitive advantages. In general, an IS/IT outsourcing deal concerns an agreement or contract (service level agreement or SLA) between parties in which one party (the vendor organization) agrees to deliver certain services to another party (the customer organization). The outsourcing literature is persistently reporting high failure rates in IS/IT project outsourcing and suggests that the IS/IT project outsourcing process is a complex maneuver. However, it is likely that due to inappropriate strategies and short-sightedness, at least a third of IS/IT outsourcing projects fail to deliver intended targets. For decades, in numerous fields, the issue of complexity has been addressed by applying the concept of modularity. Modular architecture is a key aspect of the concept of modularity. An in-house team of skilled individuals possessing expertise in architectural and systems integration knowledge may help to achieve competitive advantage by effectively managing complexity. In addition to achieving economies of scale, the customer organization may also achieve agility and flexibility by combining the advantages of modularity and outsourcing. This study examines the feasibility of applying the concept of modularity in the context of IS/IT project outsourcing with the aim of further expanding its scope. The findings of empirical analyses of four cases suggest that numerous aspects of the concept of modularity are relevant in the context of IS/IT project outsourcing. The ‘modular architecture’ has emerged as one of the most relevant and was identified in three out of the four analyzed cases. It implies that the ‘modular architecture’ aspect ought to receive greater attention when designing or planning a new IS/IT outsourcing project. The authors argue by stating that the present study has provided support for the point of view that engineering concepts such as modularity can be applied with substantial relevance to research domains which are predominantly considered from an IT management-perspective. Perhaps the use of the same concept, i.e., modularity, at both the technical and management level will provide a common vocabulary and may be even more to achieve better alignment between both levels and contribute to realizing more successful IS/IT outsourcing projects in the future. However, at the very least, a common vocabulary should help in collaboration between researchers at both levels to advance the research and practice in IS/IT project outsourcing, to which this is an invitation. It would be a contribution to the new and emerging research area focusing on applying engineering concepts to the design of enterprises, coined Enterprise Engineering. In addition to theoretical contributions, this study has implications at a practical level by providing an alternative lens for the CIO’s to analyze their future IS/IT projects.