Outsourcing contracts as instruments of risk management Insights from two successful public contracts

Outsourcing contracts as instruments of risk management Insights from two successful public... Purpose – This paper aims to examine contracts in public jurisdictions to compare academic theories related to outsourcing risks and risk management strategies to current practice in order to extend and refine theory concerning what risk management strategies can, or should, be included in outsourcing contracts. Design/methodology/approach – An automated content analysis tool is used to rigorously compare contract documents in two public jurisdictions to a comprehensive outsourcing risk framework from previous research. Findings – The findings indicate that although IS outsourcing risk factors are widely acknowledged in the literature, they are not fully specified in the outsourcing contracts that are implemented in some public organizations. This research surfaces some of the differences in the techniques implemented through actual contracts to manage the risks inherent in IS outsourcing, including some strategies not previously identified in the literature. Also, not all risks need to be addressed in the contract to have a successful outsourcing engagement. Practical implications – The improved framework for thinking about risk management strategies in the contracting process shown within the paper can provide important ideas and insights for managers contemplating or renewing outsourcing engagements. Originality/value – This paper uses content analysis to rigorously compare academic theory to actual practice to extend theory. Specifically, it discovers several risk management strategies that have not been presented in previous research. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Enterprise Information Management Emerald Publishing

Outsourcing contracts as instruments of risk management Insights from two successful public contracts

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Publisher
Emerald Publishing
Copyright
Copyright © 2007 Emerald Group Publishing Limited. All rights reserved.
ISSN
1741-0398
DOI
10.1108/17410390710830691
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper aims to examine contracts in public jurisdictions to compare academic theories related to outsourcing risks and risk management strategies to current practice in order to extend and refine theory concerning what risk management strategies can, or should, be included in outsourcing contracts. Design/methodology/approach – An automated content analysis tool is used to rigorously compare contract documents in two public jurisdictions to a comprehensive outsourcing risk framework from previous research. Findings – The findings indicate that although IS outsourcing risk factors are widely acknowledged in the literature, they are not fully specified in the outsourcing contracts that are implemented in some public organizations. This research surfaces some of the differences in the techniques implemented through actual contracts to manage the risks inherent in IS outsourcing, including some strategies not previously identified in the literature. Also, not all risks need to be addressed in the contract to have a successful outsourcing engagement. Practical implications – The improved framework for thinking about risk management strategies in the contracting process shown within the paper can provide important ideas and insights for managers contemplating or renewing outsourcing engagements. Originality/value – This paper uses content analysis to rigorously compare academic theory to actual practice to extend theory. Specifically, it discovers several risk management strategies that have not been presented in previous research.

Journal

Journal of Enterprise Information ManagementEmerald Publishing

Published: Oct 23, 2007

Keywords: Outsourcing; Information management; Risk management; Contracts

References

  • Managing the risk of IT outsourcing
    Aubert, B.A.; Dussault, S.; Patry, M.; Rivard, S.
  • The nature of the firm
    Coase, R.H.
  • Two dimensions of software acquisition
    Nelson, P.; Richmond, W.; Seidman, A.
  • Making the information systems outsourcing decision: a transaction cost approach to analyzing decision problems
    Ngwenyama, O.; Bryson, N.
  • Extended‐enterprise systems' impact on enterprise risk management
    Sutton, S.G.
  • Information technology in public services: towards the contractual organization?
    Willcocks, L.; Currie, W.L.

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