Co-operative partnership and ‘total’ IT outsourcing: From contractual obligation to strategic alliance?

Abstract

Leslie Willcocks and Chong Ju Choi address the issue of whether cases of ‘total’ IT outsourcing merit descriptions such as ‘strategic alliance’ ‘cooperative’ or ‘strategic partnership’. The business strategy literature is used to elicit developments in conceptual aspects of strategic alliances in the framework of co-operative partnerships. The concepts of partnering and of co-operation are often poorly defined in both academic and practitioner usage. However, the paper finds a common contrast made in the business strategy and Information Systems (IS) literatures between short-term ‘contractual’ versus long-term ‘trust/relationship’ approaches to partnering, with each having different implications for what partnership would amount to in action. One assumption from the literature explored in this paper is that all Information Technology outsourcing contains elements of co-operative agreement, and that, as more major decisions and areas are outsourced, a client organisation will need to develop long-term trust relationships with its vendor — that is relationships more typically underpinning strategic alliances as described in the business strategy literature. The paper finds the Henderson (1990) model a useful starting point for bringing together the business strategy and IS literatures on the subject, but, against research, discovers its model of ‘strategic partnership’ deficient in seven important respects. The paper details research into three ‘total’ outsourcing cases. It suggests defining characteristics of an IT strategic alliance to include: a high degree of IT interdependence in primary internal areas of the organisations involved; and a significant shared development and use of IT, focusing on market-place, that is external, activities. The paper finds even ‘total’ IT outsourcing cases rarely having these characteristics. In terms of practice, this means that organisations that ‘total’ outsource their IT still need to operate many of the management practices found in successful examples of selective outsourcing, as researched by Willcocks and Fitzgerald (1994a).