Beruflich Dokumente
Kultur Dokumente
Enhance Outcomes:
Cases in a Cross-cultural Context
By
Wei Wu
2006
Acknowledgement
This thesis can not be completed without the generous support of many people.
First and foremost, I would like to express my sincere gratitude to my supervisors,
Professor Angle Cavaye and Professor Dubravka eez-Kecmanovi for their
indispensable guidance, feedback and encouragement. I am deeply appreciative of the
time, dedication, and general all-round wisdom they have shown to the thesis.
I owe a special debt of gratitude to my Chinese supervisor from Fudan University,
Professor Lihua Huang, who kindly helped me to get access to the case organisation in
this study. My heartfelt thanks also go to Professor Xiongwen Lu, Dr. Chen Zhang, Dr.
Xianghua Lu, Yun Yang, and Linlin Shao who helped me approach the potential
informants. I am deeply indebted to all the informants who gave generously their time
to participate my research project. The collection of data for this study would not have
been possible without co-operation and support of these persons.
I would like to acknowledge Associate Professor John DAmbra, Dr. Geoff Dick,
Vincent Pang, Stuart Jones and two anonymous reviewers for their constructive
comments and advice on this research during the 16th Australasian Conference on
Information Systems at Sydney.
In addition, I am grateful for the amending assistances from Jason and Christy, who
read an early draft and provided me with several suggestions for improvement.
Last, but certainly not least, I am forever indebted to my family for their unwavering
love, understanding and support when it was most required.
Thank you all!
Wei Wu
i
Abstract
Information Technology (IT) outsourcing is a serious option available to modern
managers aiming to enhance the competitive position of an organisation through IT. An
emerging trend is the focus on relationship management in IT outsourcing, imploring
organisations to look past tactical objectives and concentrate on strategic outcomes. In a
global economy business sponsors are connecting with overseas vendors in IT
outsourcing in an attempt to accelerate realisation of benefits. This complicates
outsourcing arrangements, because cross-cultural differences may add to the complexity
of fostering relationships.
This study examines how to manage IT outsourcing relationships in a cross-cultural
context to enhance IT outsourcing success. Due to the exploratory nature of this study,
interpretivist case studies were adopted. The researcher investigated three IT
outsourcing cases within one Chinese organisation. One case has a vendor with a
western cultural background and the other two with a Chinese cultural background. The
main data were collected through interviews with key managers in the case organisation,
complemented by secondary data (such as published reports, internal documents). Some
additional data concerning the cross-cultural differences were also collected from the
two Chinese vendors and another western vendor who provided corporate strategy
consulting services to the case organisation.
Analysis of data showed that a good contract implementation, the established trust and
the acknowledgement of vendors high value were recognised as the three
distinguishing characteristics of a satisfactory IT outsourcing relationship. In managing
relationships the outsourcing company emphasised not only contract implementation
but even more importantly communication with vendors, recognition of mutual interests,
establishment of social/personal bonds, and appropriate allocation of project resources.
It was shown that the relationship management practices influenced the dynamics of a
relationship as well as the outcome of an IT outsourcing project. Furthermore, the
ii
iii
iv
Table of Contents
Table of Contents ................................................................................. v
1. Introduction ..................................................................................... i
1.1
1.2
1.3
1.4
1.5
1.6
1.7
IT outsourcing .......................................................................................................... 12
2.2
2.2.1
2.2.2
2.2.3
2.2.4
2.3
Cross-cultural differences......................................................................................... 35
2.3.4
2.6.2
2.7
3.3
Case design............................................................................................................... 56
3.3.1
Multiple-case design........................................................................................................ 57
Embedded cases............................................................................................................... 58
3.3.6
3.4
Data collection.......................................................................................................... 63
3.4.1
3.5
Data analysis............................................................................................................. 68
4.2.4
4.2.5
4.2.6
4.3
4.4
4.5
5.1.1
5.1.2
5.1.3
5.2
5.2.1
5.2.2
5.3
5.3.1
vi
5.3.2
5.3.3
5.3.4
5.3.5
5.3.6
5.4
6.2.2
6.2.3
6.5
6.5.1
6.5.2
vii
List of Figures
Figure 1.1: Structure of Chapter 1..1
Figure 2.1: Structure of Chapter 2....11
Figure 2.2
ix
List of Tables
Table 2.1:
Table 2.2:
Table 2.3:
Table 2.4:
Table 4.1:
Table 4.2:
Table 5.1:
Table 5.2:
Table 5.3:
Table 5.4:
Table 5.5:
Table 5.6:
Table 5.6a:
Table 5.6b:
Table 5.6c:
Table 5.7:
Table 5.7a:
Table 5.7b:
Table 5.8:
Table 5.8a:
Table 5.8b:
Table 5.9:
Table 5.9a:
Table 5.9b:
Table 5.10:
xi
1. Introduction
This research focuses on how best to manage the information technology (IT)
outsourcing relationships to enhance the outcome of an IT outsourcing project in a
cross-cultural context.
This chapter first sets the scene for the research and presents the research problem and
three research questions (Section 1.1). In subsequent sections, the research is justified
(Section 1.2) and the methodology used in the thesis is briefly described (Section 1.3).
Finally, definitions of major terms used throughout the thesis are provided (Section 1.4),
the delimitations of scope are outlined (Section 1.5) and the thesis structure is presented
(Section 1.6). The structure of Chapter 1 is shown in Figure 1.1.
1.1
outsourcing, urges the research community to update cumulative research findings to fit
the current context.
IT outsourcing offers executives a good opportunity to leverage internal and external
resources to improve business focus, free up resources, share risks and gain access to
top-shelf capabilities (Corbett, 1996). An IT outsourcing arrangement implies the
development of an inter-organisational relationship, which in turn implies a dependency
between the organisation that is outsourcing and the vendor providing the outsourced
functionality (Willcocks and Kern, 1998; Cheon et al., 1995; McFarlan and Nolan, 1995;
Kern and Willcocks, 1996). As such, IT outsourcing entails cultivation of an interorganisational relationship between customer and vendor (Lee et al., 2004). A good
relationship with the vendor is key to mitigating risks which include opportunism of
vendors, fast changing technology and uncertainty in the business environment.
Regarding the management of outsourced IT activities, recent researchers have focused
on the impact of partnerships on outsourcing success (Lee et al., 2004). The outcomes
of most early IT outsourcing initiatives were disappointing (Hirschheim and Lacity,
2000; Lacity and Willcocks, 1998). A lack of attention to the on-going relationship with
the vendor probably contributed to limited success (Lacity, 2000).
The globalisation phenomenon has meant that outsourcing contracts have become larger
in scope and in size. Organisations are advised to use global outsourcing principles, by
picking best-in-world external vendors, as a means to improve competitiveness (Mol et
al., 2005). Cultural factors can confound efforts to cope with the complexity of
relationship management (Niederman, 2005). Different cultures support different sets of
management beliefs and practices, particularly when whose cultures reflect
fundamentally different conceptions of reality (Chen and Partington, 2003). However,
few publications have taken the factor of culture into consideration when examining
relationship management in IT outsourcing practice.
Information technologies are continually changing and improving. The specific
technology issues surrounding IT outsourcing agreements necessarily make them more
complex and fluid than an ordinary contract (McFarlan and Nolan, 1995). The dynamic
features of the information technology may add further complexity to relationship
management in outsourcing arrangements.
3
To address the aforementioned issues, the central research problem identified for this
thesis is How can an IT outsourcing relationship be managed to enhance the outcome
of an IT outsourcing project in a cross-cultural context?
With this in mind, three research questions are formulated:
RQ 1 What are the distinguishing characteristics of a satisfactory IT outsourcing
relationship?
RQ 2 How does relationship management influence the outcome of an IT
outsourcing project?
RQ 3 To what extent do cross-cultural differences affect relationship management
in IT outsourcing?
These research questions are developed in detail at the end of Chapter 2.
1.2
1.3
1.4
It is critical to clarify some key terms. The key terms in this study are: IT outsourcing,
relationship management in IT outsourcing, and culture.
IT outsourcing
In this study, the broad definition of IT outsourcing adopted is the definition used by
Loh and Venkatraman(1992, p. 58): a decision taken by an organisation to contract-out
or sell the organisations IT assets, people and/or activities to a third party vendor, who
in return provides the services for a certain time period and monetary fee.
IT outsourcing can potentially include anything from a simple application customisation
to the leasing of an entire computer department. For the purpose of this research the
narrow definition of IT outsourcing is adopted where IT outsourcing refers specifically
to application development. Application development includes packaged commercially
available software, customisation services, and developing custom applications
(Murthy, 2004, p. 545).
Relationship management in IT outsourcing
Relationship management in IT outsourcing is defined as post-contract management of
an IT outsourcing venture which requires both sides to look beyond the traditional armlength supplier-buyer type arrangements and to move more toward a partnering
operating within the spirit of the contract (Kern, 1997, p. 37).
Culture
The focus of the study is an IT outsourcing arrangement between two partners who may
be from two different national cultures. Culture is a fuzzy set of attitudes, beliefs,
behavioural norms, and basic assumptions and values that are shared by a group of
people, and that influence each members behaviour and his/her interpretations of the
meaning of other peoples behaviour (Spencer-Oatey, 2000, p. 4). It is expected that
different values and beliefs will reflect different conceptions of relationship
management practice.
Chapter 2 provides further detail about these main terms and explains why these
definitions were adopted for this research.
1.5
applications development, supplied by vendors. Other services are not targeted in this
study.
Secondly, there are lots of factors that influence the outcome of an IT outsourcing
project, including the outsourcing decisions and the selection of vendors. This research
focuses on relationship management and its contribution to the outcome of an IT
outsourcing project. Thus, for the purpose of this research, other factors, which may
also contribute to the outcome of an IT outsourcing project, are ignored.
Thirdly, the main data set in this research was collected from the customer respective,
while the outcome of an IT outsourcing project through relationship management is also
determined to a significant extent by the vendor. During the major stage of data
collection the researcher had no access to the vendors, but in the late stage of research
there was an opportunity to conduct a few interviews. Limited data regarding the culture
issues were obtained nearly one month before the proposed thesis submission date.
While the focus of this research was on IT outsourcing relationship management from
the outsourcing companys perspective, comparatively small input from the vendors is
considered a limitation.
Fourthly, the findings of this study are, of course, based on a limited sample of IT
outsourcing cases from one country and a single industry, so generalisation to other
industries and other contexts can only be of a theoretical nature.
Finally, the empirical research takes place in China and the empirical data are present in
Chinese. The translation into English was cautiously conducted to retain the original
meaning of the text. The research findings have to be carefully interpreted, especially
when identifying cross-cultural implications.
1.6
Thesis structure
Chapter 2 reviews the main areas of literature that are relevant to the research questions:
IT outsourcing; managing IT outsourcing relationships; cross-cultural differences; and
managing IT outsourcing relationships in a cross-cultural context. The chapter notes
that considerable attention has been given to the question of IT outsourcing, but not
enough attention has been paid to relationship management in IT outsourcing which
occupies a larger and larger portion of time of IS managers now. Little existing
literature has taken account of cross-cultural factors while global collaboration in IT
outsourcing has become an evident trend in the real world. Last, the research problem
and research questions are identified to address the research gap in the existing literature.
Chapter 3 introduces, justifies and details the research methodology used in the
empirical component of the study. The methodology chapter depicts a comprehensive
research process from taking an interpretive stance, adopting a case study strategy,
collecting data from interviews and archival documents, and analysing data in the light
of interpretive research guidelines. In addition, the validity and reliability of the adopted
research method as well as some ethical considerations are briefly discussed.
Chapter 4 and Chapter 5 present the research findings of this study.
Chapter 4 explores the context of the data used for addressing the research problem. The
approach to presentation of the data analysis for Chapter 4 and Chapter 5 is clarified at
the beginning. Then the selected case organisation is described as well as its IS
development history. The three cases identified from the case organisation are
introduced in turn.
Chapter 5 presents the major research findings regarding the three research questions.
Findings are generated through the cross-case comparison of the three cases. Arguments
about the distinguishing characteristics of a satisfactory relationship, the influence of
relationship management to the outcome of IT outsourcing projects, and the crosscultural differences in the relationship management are provided. Also, how these
arguments derived from the data analysis are presented.
Chapter 6 summarises the whole research project by addressing the research problem
and answering the three research questions. The conclusion chapter also compares the
research findings with extant literature, and discusses the contributions and implications
9
of these findings for academics as well as practitioners. The limitations of the research
and potential future research areas are also suggested.
1.7
Chapter summary
This chapter laid the foundation for the thesis. It started with describing the background
of IT outsourcing, relationship management in IT outsourcing, and managing IT
outsourcing relationships in a cross-cultural context. From the background description,
the research problem and three research questions were derived. Resolving this research
problem is the target of this research. Next, the chapter justified why the research into
the management of IT outsourcing relationships in a cross-cultural context is necessary
and meaningful. Finallythe methodology adopted for this study was briefly clarified,
key terms were defined, and the delimitation of the scope was acknowledged.
The next chapter reviews the existing literature related to the research problem and
identifies the research questions.
10
2. Literature Review
This chapter reviews and synthesises existing literature about the parent and immediate
disciplines relevant to the research problem: How can an IT relationship be managed to
enhance the outcome of an IT outsourcing project in a cross-cultural context?
The background for the study is provided by the literature on IT outsourcing and on
cultural differences. Firstly, IT outsourcing (Section 2.1) and the management of IT
outsourcing (Section 2.2) are explored. Then cross-cultural differences (Section 2.3) are
investigated. Next, the literature about the immediate discipline, managing IT
outsourcing relationships in a cross-cultural context (Section 2.4), is examined. Chapter
2 concludes with a discussion of gaps in the literatures (Section 2.5) which leads to the
presentation of the research problem and research questions (Section 2.6). Figure 2.1
shows graphically the structure of Chapter 2.
IT outsourcing
(Section 2.1)
Managing IT outsourcing relationships
(Section 2.2)
Cross-cultural differences
(Section 2.3)
11
2.1
IT outsourcing
This section reviews the existing literature on IT outsourcing which is the background
area of this study. First, what IT outsourcing means (Sub-section 2.1.1) is introduced.
Then, why IT should be outsourced (Sub-section 2.1.2) is explained. Last, the change of
IT outsourcing research issues over time (Sub-section 2.1.3) is explored.
1996) and addition by subtraction (Spee, 1995). This research consistently uses the
term IT outsourcing.
The existing literature provides a range of definitions or descriptions of IT outsourcing.
The broad definition of IT outsourcing adopted in this research is articulated by Loh and
Venkatraman (1992): IT outsourcing is a decision taken by an organisation to contractout or sell the organisations IT assets, people and/or activities to a third party vendor,
who in return provides the services for a certain time period and monetary fee (Loh
and Venkatraman, 1992, p. 336). This definition includes a useful range of IT services
and at the same time illustrates the diversity and breadth of services to be covered under
an outsourcing agreement.
In fact, IT outsourcing is an umbrella term that covers the entire gamut of information
services, from the development of a simple applications program to the leasing of an
entire computer department (Apte, 1990). The common functions of IT that are
outsourced can be classified under four groups (Murthy, 2004, p. 545):
IT Infrastructure includes data centres, end-user PCs, core IT services such as Email, Internet, portals to manage data and documents, connecting networks
(LANs, WANs), information security, helpdesk, data backups, and disaster
recovery.
For the purpose of this research I focus on the third of these: the outsourcing of
applications development. The reasons for focusing on applications development are as
follows. This research focuses on the cross-cultural outsourcing relationships.
Applications development demands a high degree of interaction and involvement in the
dynamics of the requirements of service provisioning. Unpredictable changes in
applications development require a high degree of relationship management between the
customer and the service provider (Beulen et al., 2005, pp 138-139). The risk of conflict
13
Benefits of IT outsourcing
There is evidence that outsourcing contributes positively to market value (Rappaport,
1986; Alexander and Young, 1996, Hayes et al., 2000). Prior to the Kodak deal, the
universal perception of outsourcing was that only smaller companies who could not
manage in-house operations resorted to outsourcing in order to lower their operation
costs (Khosrowpour, 1995). However, the Kodak-IBM arrangement gave outsourcing
respectability and encouraged large companies to look beyond tactical objectives and
concentrate on strategic outcomes (Bartell, 1998).
The drivers of IT outsourcing can be divided into two categories: cost drivers and core
competence drivers.
Cost drivers (mainly including cost saving and cash needs): the most frequently cited
benefit of IT outsourcing is cost saving which comes out of the economic considerations
(Carmel and Agarwal, 2002; Lacity and Willcocks, 1998). It is believed that an outside
14
vendor can provide the same level of service at a lower cost than the internal IS
department. The often cited rationale is that the vendor typically has better economies of
scale, tighter control over fringe benefits, better access to lower-cost labour pools, and
more focused expertise in managing IT (e.g., Lacity et al., 1994). It must be
acknowledged, however, that cost reduction through IT outsourcing is controversial,
especially because the vendor often maintains an identical infrastructure in terms of
equipment and personnel and has to make a profit through the arrangement (Lacity and
Hirschheim, 1993). Nevertheless, empirical evidence (e.g., Alper and Saharia, 1995;
Lacity et al., 1994; Loh and Venkatraman, 1992; McFarlan and Nolan, 1995) suggests
that IT outsourcing is still perceived by managers to be a means to reduce IT costs.
Core competence drivers (mainly including improved business focus, shared risks and
extending technical capabilities): the potential for outsourcing to increase strategic focus
has received heightened attention as organisations have emphasized their core
competencies (Hemel and Prahalad, 1996; Quinn, 1999). Essentially, the argument is:
if there is no strategic value in performing the function internally, outsource it!
(Tereska, 1990, p. 54). If IT outsourcing enables greater focus on strategic priorities,
outsourcing may become increasingly important to building more agile organisations
capable of competing in the global economy (Quinn and Hilmer, 1994). IT outsourcing
vendors develop a core competency in IT management and can build and leverage best
practices because, unlike the customer organisation, IT management is the vendors
core business (Levina and Ross, 2003). By delivering their core competency to
customers, vendors free customer organisations to focus management attention on their
unique core business (Ross and Westernman, 2004).
Table 2.1 summarises the major benefits of IT outsourcing and identifies the IS
literature that discusses the individual benefits.
15
Summary explanation
Ability of the vendor to
provide the same level
of service at lower
costs.
Simplify the
management agenda by
focusing on core
activities and
outsourcing no core
activities.
Outsourcing provides
Extend
access to expertise not
technical
capabilities available in the
organisation.
References
Alper & Saharia (1995);
Arnett & Jones (1994);
Beaumont & Sohal (2004);
Carmel & Agarwal (2002);
Harland et al. (2005);
Lacity et al. (1994);
Loh (1994);
Loh & Venkatraman (1992);
McFarlan & Nolan (1995);
Palvia (1995); etc.
Beaumont & Sohal (2004);
Harland et al. (2005);
Lacity et al. (1994);
McFarlan & Nolan (1995);
etc.
Cross (1995);
Lacity et al. (1994);
Levina & Ross (2003);
McFarlan & Nolan (1995);
Palvia (1995);
Ross & Westernman (2004);
Slaughter & Ang (1996); etc.
Arnett & Jones (1994);
Beaumont & Sohal (2004);
Cross (1995);
Grover et al. (1994);
Harland et al. (2005);
Lacity et al. (1994);
Loh & Venkatraman (1992);
McFarlan & Nolan (1995);
Palvia (1995);
Slaughter & Ang (1996);
Teng et al. (1995); etc.
Risks of IT outsourcing
When organisations transfer an internal capability to an outside party, they lose some
control over that capability (Henderson, 1990). Enthusiasm for outsourcing has been
16
countered by concerns caused by such loss of control. The two primary concerns of risk
in outsourcing are to outsource the right things and to outsource them the right way.
More specifically, four major types of risks have been highlighted in prior literature
(e.g., Alexander and Young, 1996; Aubert et al., 1998; Earl, 1996; Lacity and
Hirschheim, 1993; Quelin and Duhamel, 2003): uncertainty risks, hidden cost risks,
strategic risks, and vendor risks.
Each of these risks will be briefly explained below.
Uncertainty risks. Changes in the customers market and changes resulting from new
technologies lead to new expectations, new costs, and eventually new metrics for
service (Quelin and Duhamel, 2003). There is a risk that customers and vendors sign
contracts that do not necessarily meet future needs (Barthelemy and Geyer, 2000; Lacity
and Hirschheim, 1993). This risk encompasses the uncertainty about the long-term
viability of contractual arrangements (Quelin and Duhamel, 2003).
Hidden cost risks. There is a transition process involved when moving from internal
provisioning to outsourcing. It may involve moving applications to a new environment
or linking outsourced and internal applications, or transitioning technical staff to a
vendor (Alexander and Young, 1996; Earl, 1996). Transition risks refer to
organisational change challenges in the transition process (Quelin and Duhamel, 2003).
For instance, employees may fail to adapt to new processes, culture, technology, or
employee arrangements, leading to the hidden costs (Aubert et al., 1998; Barthelemy,
2001).
Strategic risks. For the most part, organisations want to outsource non-strategic
capabilities while retaining strategic capabilities (Venkatraman, 1997). Strategic risks,
for example, result from possible misjudgement of what is really strategic, as many
business processes are tightly linked with IT (Quelin and Duhamel, 2003). Also,
capabilities that are non-strategic today may become strategic tomorrow (Christensen et
al., 2002). Unintentional outsourcing of a strategic capability inevitably reduces
strategic integration and agility.
Vendor risks. A vendor may have difficulty in managing subcontracted capabilities
(Alexander and Young, 1996; Earl, 1996). Vendor risk can increase if the vendor is
17
small, new, or dependent on future scale to make its business model work (Quelin and
Duhamel, 2003). Particularly with new technologies, vendors sell capabilities that have
not yet been developed. When assessing the potential of a new technology, it is difficult
to predict technical and organisational challenges (Aubert et al., 1998; Quelin and
Duhamel, 2003).
Table 2.2 summarises the main risks identified in the literature.
Table 2.2: IT outsourcing risks identified in the literature
IT outsourcing risks
Summary explanation
References
Uncertainty risks
Changes in the
customers market and
changes resulting from
new technologies lead to
new expectations, new
costs, and eventually,
new metrics for service.
Strategic risks
The possible
misjudgement of what is
really strategic and the
unintentional outsourcing
of a strategic capability
might reduce strategic
integrality and agility.
Vendor risks
The impact of
outsourcing; Degree of outsourcing;
Period of outsourcing;
Number of vendors;
Motivation
Outsourcing types
Scope
Well-designed contract
to reduce expected
contingencies
Key factors for outsourcing
partnership; Effective way
Contracts
for building partnership
(formal)
Partnership
(informal)
Global IT
outsourcing
A more complex
international
marketplace for IT
outsourcing
are dealing with a much more intriguing and complex environment than ever before
(King, 2005).
Table 2.3 summarises the change in focus on IT outsourcing issues along with theories
from the literature.
22
Motivation
Scope
(option)
Performance
Insourcing/
Outsourcing
Contract
Partnership
Global IT
outsourcing
Summary
explanation
The choice between
internally developed
technology and its
external acquisition
The impact of
outsourcing
Degree of
outsourcing; period
of outsourcing;
number of vendors;
outsourcing types
User and business
satisfaction; service
quality; cost
reduction
References
Buchowicz (1991); Looff (1995);
Martin & McClure (1983);
Sharkey (1983); Weston (1981);
etc.
Bahli & Rivard (2001); Grover & Teng (1993);
Lacity & Hirschheim (1993);
Loh & Venkatraman(1992, 1995);
Looff (1995); Smith et al. (1998); etc.
Deloof (1997); Grover & Teng (1993);
Gupta & Gupta (1992); Lacity et al. (1996);
Lacity & Hirschheim (1995);
McFarlan & Nolan (1995);
etc.
2.2
thereby enabling organisation-like knowledge transfer. The strength and stability of the
relationship derives in large part from both parties being committed to a long-term
relationship (Dwyer et al., 1987). It is often applied to comprehensive outsourcing with
an unspecified contract (Lee et al., 2004).
26
where the use of offshore resources in projects is seamlessly built into the organisations
governance model (Murthy, 2004).
Pilot
0
Ramp
6 Month 1 year
Stabilize
Mature
2 years
2.2.3
Lacity and Hirschheim (1993) conclude that the outsourcing relationship involves
conflicts of interests between vendors and customers, and is not always a partnership
as promoted in the trade press and by vendors. In contrast, McFarlan and Nolan (1995)
report a number of cases where partnership was achieved. They suggest organisations
should be careful in the selection of vendor, pay attention to the structuring of the legal
relationship, ensure mechanisms for contract flexibility and establish standards and
mechanisms for control. They conclude that best results would occur when customer
and vendor operated less as a contract and more as a strategic alliance (McFarlan and
Nolan, 1995, p. 20). Klepper (1994) also suggests developing a partnering relationship.
These papers identified the importance of partnership to ultimate IT outsourcing success.
This research agrees with the mainstream of the literature that claims a partnership
could be achieved. Therefore, Kerns (1997, p. 37) definition is adopted: the
relationship management in IT outsourcing is the post- contract management of an IT
27
outsourcing venture which requires both sides to look beyond the traditional armlengths supplier-buyer type arrangements and to move more toward a partnering
operating within the spirit of the contract (Kern, 1997, p. 37).
Subsequent research has tried to define the concept of IT outsourcing partnerships more
clearly. For instance, Grover et al. (1996) proposed measures of partnership
(including trust, communication, satisfaction and co-operation). They also established
that where higher levels of partnership exist, organisations have more positive outcomes.
However, when examining different services, their analysis only held true for systems
operations that are low in asset specificity. Despite this, Grover et al. (1996) concluded
that fostering a long-term interactive relationship based on partnership is critical to
achieving the greatest benefits from outsourcing.
Using the same instrument, Lee and Kim (1999) examined 36 vendor-customer pairs to
test the hypotheses, exploring the relationship between vendor judgments about the
relationship-quality and customer perceptions of outsourcing success. Their results
indicate that relationship quality may serve as a key predictor of outsourcing success,
which confirms the argument of Grover et al. (1996). Based on his own work, Lee
(2001) emphasized the importance of knowledge sharing through the outsourcing
partnership as a complement to his previous work.
Therefore, previous IT outsourcing research has already demonstrated that the quality of
relationships with vendors has significant impact on the outcome of IT outsourcing
projects.
28
Implementing structures
Relationship management plays a crucial role in balancing an organisations reliance on
formal and legal procedures (contract management, formal bargaining, formal legal
contract, and role interactions) with informal and inter-personal norms (e.g., informal
sense making, psychological contract, and personal interactions in relationship
management) (Shi et al., 2005). This balance is the foundation to establish an
implementing structure in an IT outsourcing project and understand the relationship
management practice (Kern and Willcocks, 2000). Analysis of the existing literature on
organisation theory (e.g., Faulkner, 1995; Musgrave and Anniss, 1996), interorganisational relationship theory (White and Levine, 1961; Oliver, 1990), marketing
theory (Cunningham, 1980; Ford, 1980; Anderson and Narus, 1990) and IS theory
(Henderson, 1990; Konsynski and McFarlan, 1990; Bensaou and Venkatraman, 1996)
elicits a list of recurring key concepts: contract, communications, mutual interests,
social/personal bonds, and project resources. These concepts help formulate an
implementing structure and reflect the balance that Shi et al. (2005) addressed. Each
concept will be now discussed below and its references will be listed in Table 2.4.
Contract. Many customer organisations get IT outsourcing services through signing
detailed and lengthy agreements with their vendors. This phenomenon shows that it is
necessary to have a formal mechanism through which these services can be coordinated
and synchronised (Shi et al., 2005). Feeny and Willcocks (1998b) proposed that contract
facilitation should act as this kind of mechanism to ensure the success of IS outsourcing.
Fundamentally, contract facilitation is an action-oriented competence with a purpose to
manage contract negotiation, execution, and conflict resolution (Shi et al., 2005). It is a
response to the bounded rationality of human beings that results in incomplete contracts
(Hart and Moore, 1988), which demands continuous adjustments from all involved
parties. Feeny and Willcocks (1998b) also indicated that while contract facilitation
works to make things happen, contract monitoring is the capability of an organisation to
protect its businesss contractual position over time. Fundamentally, contract
monitoring is an action-oriented competence that provides the necessary performance
measurement process and final performance information for the diagnosis of problems
and the prescription of solutions in managing customer and vendor behaviours (Shi et
al., 2005). Both contract facilitation and monitoring will generate many interaction
opportunities at individual, team, and organisational levels between IT outsourcing
29
vendors and customers (Shi et al., 2005). Active management efforts have to be geared
towards operationalising the contract (Willcocks and Kern, 1998).
Communication. Better communication might lead to greater trust which helps to avoid
conflicts, facilitate solutions to problems, and reduce uncertainty levels (Aiken and
Hage, 1968; Easton, 1992). Within the context of IT outsourcing projects, the
importance of communication is expected to be magnified since the customer and
vendor are separated by organisational boundaries, cultures and policies (Lander et al.,
2004). Repeated communication over time develops a rich pool of information about the
service provider, enabling more accurate assessments of future behaviour (Granovetter
1985). It is believed that frequent and accurate communication is essential to building
levels of socially-oriented trust in inter-organisation relationships (Shapiro et al., 1992).
Trust borne of communication in IT outsourcing settings should improve the ability of
actors from both organisations to work toward shared goals (Lander et al., 2004).
Mutual interests. The initial motivation behind the willingness to make cooperative
efforts by both parties may be purely self-interested in nature. Both customer and
vendor are taking efforts to understand the common areas of interests when initiating an
IT outsourcing project (Das and Teng, 2001). Establishing mutual interests helps to
improve cooperation by sharing the risks and rewards of the venture equally (Willcocks
and Kern, 1998). A variety of mechanisms, including regular meetings and
communications, could be used to increase the number of joint dealings and increase
familiarity with the common objectives. They also provide an efficient way to
communicate project expectations for both parties (Langfield-Smith and Smith, 2003),
thereby encouraging trust (Browning et al., 1995; Chiles and McMackin, 1996).
Social/personal bonds. Establishing social/personal bonds is a kind of interpersonal
behaviour which is identified as an organisations capability to cooperate with other
organisations (Nelson, 1991). The capability to manage social/personal bonds refers to
the ability to adopt strategies for interacting and working with other people in the
workplace (Joseph et al., 1996) and the ability to develop a personal social network
(Sawyer et al., 1998). Social/personal bonds established between individuals in the
customer and vendor organisations increase familiarity and trustworthiness, thus
determining the raison detre for the flourishing of the relationship. In order for deep
and personal ties to emerge, parties must interact extensively over time in a way that
30
allows each party to demonstrate their concern for each other (Gulati, 1995; Lewicki
and Bunker, 1996). In cross-functional environments, this capability to develop and
maintain relationships with others is especially crucial (Bassellier and Benbasat, 2004 ).
Project resources. Many IT outsourcing services must be tailored to meet the unique
needs of the customer organisation (Noe, 1999), so obtaining such services from a
vendor may require the vendor to make an asset-specific investment (Gainey and Klaas,
2003).
relationship with the vendor. Hence, it is thought to expose the vendor to an increased
risk of opportunistic behaviour (Williamson, 1983). The project resources include the
allocation of service delivery experts, thereby subjecting them to the day-to-day
authority of the customer (Lacity and Willcocks 1998). Finally, partnerships rely on
complementary resources (Dyer and Singh 1998) and voluntary resource allocations so
as to benefit the partnership (Khanna et al., 1995). Both the customer and vendor show
their level of commitment to the relationship through their investments of project
resources, including knowledge and time (Johanson, 1994).
Table 2.4 summarises the implementing structure and its references.
31
Reference
Building trust
Trust is important in situations where there is risk (Coleman, 1990; Luhmann, 1979;
Sako, 1992) and it has the capability of reducing the possibility of opportunistic
behaviour (Axelrod, 1984; Birnberg, 1998; Bradach and Eccles, 1989). Therefore, trust
is often associated with relationship management and project outcomes in the existing
literature of IT outsourcing (e.g., Barthelemy, 2003; Grover et al., 1996; Sabherwal,
1999; Saunders et al., 1997; Willcocks and Kern, 1998).
Trust is associated with relationship management, as trust helps to strengthen the
relationship between partners, makes the relationship more durable in the face of
conflict and encourages interactions between partners involving knowledge exchange
32
and promotion of each others interests (Johanson and Mattsson, 1987). In addition,
trust may increase the predictability of mutual behaviour through each party honouring
commitments and allowing partners to deal with unforeseen contingencies in mutually
acceptable ways (Sako, 1992, p. 37). Several researchers have noted the link between
trust and information requirements (e.g., Creed and Miles, 1996; Luhmann, 1979;
Tomkins, 2001; Wicks et al., 1999). There is an inverse relationship between
willingness to trust and the need for information (Wicks et al., 1999). The provision of
information is certainly important in outsourcing relationships, where the sharing of
information and the generation of performance information is common (LangfieldSmith and Smith, 2003).
Three definitions of trust relevant to managing IT outsourcing relationships exist in the
existing literature (Sako, 1992):
These forms of trust may be present to some extent in the early stages of an outsourcing
relationship; they can also develop further over time (Langfield-Smith and Smith, 2003).
33
Three stages of trust are identified in the extant literature to exhibit the trust
development process in the relationship management (Lewicki and Bunker, 1996;
Shapiro et al., 1992):
Deterrence-based trust is the lowest level of trust and exists when both parties
can be trusted to keep their word (Lander et al., 2004; Shapiro et al., 1992).
Strategies such as repeated, concurrent interactions, multifaceted relationships
and reputation are useful in building deterrence-based trust (Shapiro et al., 1992).
Trust is also associated with project performance in the existing literature (e.g.,
Calderon et al., 2002; Fukuyama, 1995; Gainey and Klaas, 2003; Knack and Keefer,
1997).
Gainey and Klaas (2003) believed trust was highly related to customer satisfaction. The
following arguments illustrate why trust is associated with customer satisfaction:
First, trust is likely to allow the vendor to better serve customer needs (Gainey
and Klaas, 2003). Tacit knowledge plays a key role in much of training and
development and, as such, vendors may sometimes have difficulty explaining
the rationale behind their recommendations (Connor and Prahalad, 1996). As
34
such, when there is limited trust, an organisation may be less likely to fully
utilise vendor expertise thus affecting the quality of the services provided and,
in turn, customer satisfaction.
Third, to the extent that trust constrains opportunistic behaviour, it may reduce
the time spent by customers monitoring vendor action (Gainey and Klaas, 2003).
A key component of customer satisfaction relates to whether a vendor can be
relied upon to complete required duties without continual monitoring
(Parasuraman et al., 1991).
Fukuyama (1995) argued that a high level of trust inherent in a national culture could
affect the economic performance by lowering transaction costs, which, in turn, can
promote efficiency and, thus lead to a more positive project outcome. Knack and Keefer
(1997) showed that subjective measures of trust had a significant impact on aggregate
economic performance. They argued that the relationship between trust and growth was
relatively large in developing countries. Similarly, Calderon et al. (2002) used
subjective trust data for a cross-section of countries to demonstrate that, in countries
with lower law enforcement or lower creditor protection, trust played a more important
role in performance.
2.3
Cross-cultural differences
35
Specific to individual
Universal
Personality
Culture
Human Nature
Learned
Inherited
36
37
Symbols
Heroes
Rituals
Values
Practices
managers from ten European countries in relation to their conceptions of the function of
management (Laurent, 1983). Asian countries have been reported to have a tendency to
develop personal relationships with their business partners before getting down to the
specifics of negotiation (Pheng and Leong, 2000). In contrast, Americans like to get to
the point more quickly and directly even though such an approach may embarrass
someone personally and publicly (Foster, 1992).
Among these studies of cross-cultural management, some pieces of research specifically
address the incongruent management beliefs between Chinese culture and Western
culture, which is relevant to this research context. For instance, Tse et al. (1988)
investigated decision making in four simulated international marketing situations with
executives from China and Canada. Findings suggest that Chinese companies highly
value long-term exchange relationships, restricted competition, and unquestioned
respect for leaders. Pheng and Leong (2000) studied a real case of an international
construction project in China with a US-based vendor. This study reports that the
Chinese company emphasised the attributes of friendship, mutual interests and the
importance of mutual trust during the initial stages of negotiation more than its Western
counterpart. Chen and Partington (2004) also investigated construction project
management work in the contexts of Chinese culture and UK culture. This study
highlights the fundamental differences in conception of the meaning and significance of
different forms of relationship in the project, as well as other perspectives such as
conflict resolution, organisational structure preference and attitude to uncertainty.
40
cultural differences referred to in the IS discipline are those of Hofstede (1980; 1991),
Trompenaars (1993) and Schwartz (1994).
The most influential study on national cultures was conducted by Hofstede (1980). Her
work was based on a comparison of the values of matched samples (employees and
managers similar in all respects except nationality) working in 53 national subsidiaries
of the IBM Corporation. This analysis indicates four dimensions of national culture:
Masculinity vs. Femininity (MA) how far roles in society are differentiated
between men and women.
Power distance (PD) the extent to which inequality is accepted by the less
powerful people in society.
Uncertainty avoidance (UA) the level of concern about law and order in a
society.
A fifth dimension, long-term vs. short-term orientation (LT), was added later, based on
a study of students in 23 countries using a questionnaire prepared by the Chinese Value
Survey in Hong Kong (Hofstede, 1991). Data show that China is distinctly different
from Western countries on dimensions ID, PD and LT.
Trompenaars (1993) identified seven dimensions of culture. Five can be grouped in one
category: relationships with people (universalism vs. particularism, individualism vs.
communitarianism, neutral vs. emotional, specific vs. diffuse, and achievement vs.
ascription). The sixth dimension concerns attitudes to time and the seventh attitudes to
the environment. Trompenaars(1993) seven dimensions have been described as
conceptually related to some of Hofstedes (1980; 1991) dimensions.
Schwartzs (1994) model is based partly upon Hofstedes (1980; 1991) and Kluckhohn
and Strodtbecks (1961) work. The two basic dimensions in the model are conservatism
41
vs. autonomy (affective and intellectual) and self-enhancement (hierarchy and mastery)
vs. self-transcendence (egalitarian commitment and harmony). The study arranges value
types and broad dimensions into a continuum of values representing the relationship
between personality and cultural factors. Schwartz (1994) suggests that there are two
broad cultural archetypes of societies with different assumptions about life and work:
contractual cultures and relationship cultures.
The work of Hofstede (1980; 1991), Trompenaars (1993) and Schwartz (1994) has
alerted us to the importance of cultural differences, but has also been criticized as
somewhat simplistic (Walsham, 2002). For instance, Myers and Tan (2002) suggest that
the heterogeneity of national culture makes it difficult to relate national cultural values
to work-related actions and attitudes. Walsham (2002) states there is no significant
analysis of detailed work patterns and inadequate attention to the dynamic nature of
culture when adopting Hefstedes (1991) model. Spencer-Oatey (2000) also argues the
interpretive role of culture is important when considering cross-cultural interaction or
reaction towards products created in a different cultural context.
A classic study showing the limits of using Hofstedes (1980; 1991) dimensions for
predicting responses to IT implementation was Robey and Rodriguez-Diazs (1989)
paper. In this paper, the authors used case studies to show that a US organisation could
more successfully implement a major new information system in a second Latin
American country based on learning from more difficult experiences in the first. While
the experience in the first country would support the view that cultural differences make
implementation of information technology more difficult, the second implementation
showed that being an organisation headquartered in a culturally different country did not
prohibit the development of a culturally sensitive approach to such implementation.
Recent research adopting the interpretive role of culture is that of Trauth (1999; 2000).
This work examined the management of IT workers in an American-Irish cross-cultural
work environment as part of a detailed longitudinal study of the information economy in
Ireland.
42
2.4
and Palvia, 2002). Moreover, even fewer papers examine how cultural differences
influence the cross-cultural collaborations which have become the recent trend of IT
outsourcing. The few existing papers in IS literature are that of Barrett et al. (1997),
Meadows (1996), Sahay and Krishna (2000), and Walsham (2002).
Meadows (1996) considered the collaborations between the customers who have local
vendors and the customers who have overseas vendors. Findings suggest that the
organisations use the module-based rather than time-based division of labour when
facing a cross-national vendor. Integration by discrete modules with the overseas
vendors is found to be more effective than passing work to the overseas partners in a
round-the-clock arrangement (Meadows, 1996).
Sahay and Krishna (2000) described a case study of a software outsourcing venture over
several years from a Canadian multinational to an Indian software house. Cultural
contradiction was reported to produce conflict initially, but the relationship showed
signs of maturing after both sides had gained an increased understanding of the others
culture. Walsham (2002) also took an interpretive stance to describe cross-cultural
differences in software outsourcing projects. Two cases (i.e. a US-India project and a
Jamaica-India project) were selected to examine the work patterns. Findings suggest
that different ways of representing space between US developers and the Indian users
resulted in a resistance from Indian users to the implementation of the GIS (geography
information system). Hands-on approaches adopted by Indian managers to control
subordinates were viewed as an adult-child approach and were perceived as
inappropriate by Jamaican participants. Barrett et al. (1997) similarly described crosscultural collaborations in software outsourcing projects between US companies and
Indian companies, examining the forms of partnership and coordination mechanisms.
2.5
Despite the apparent widespread use of outsourcing, outsourcing theory is still in its
infancy (Bartell, 1998). The antecedents, outcomes, characteristics, and mediators of IT
44
outsourcing have not been clarified so far. For one thing, the results reported in the
literature are inconsistent, thereby limiting the generalisability of findings from one
setting to another. In addition, outsourcing activities in a range of different
organisations are hard to compare with each other due to organisational idiosyncrasies,
environmental complexity and uncertainty.
The contract specifying the relationship between outsourcing vendors and their
customers has been focused on in the literature as a central issue in outsourcing. Little
academic research on relationship management in IT outsourcing has been published.
Existing studies of IT outsourcing relationships have some shortcomings:
Firstly, the majority of the studies are propositional only: they use illustrative
cases to add weight to an argument or theoretical propositions, rather than to
generate or confirm theory. IS literature needs research to build theory about
relationship management in IT outsourcing.
Thirdly, initial intent or arrangements are likely to change over the course of IT
outsourcing contracts as business and technology both evolve at high speed.
Prior static treatment of relationship management issues forfeits the chance to
capture the dynamic nature of IT outsourcing needs.
Fourthly, extant literature has identified many factors at work to influence the
degree to which relationship management work produces desirable outcomes of
IT outsourcing within any given domestic market. But the issues become more
complex when tendencies are compared between practitioners of multiple
45
2.6
This section defines the overarching research problem and the specific research
questions to be addressed.
46
This problem is addressed from the perspective of the customer organisation that is
outsourcing its IT. The management issues perceived by the IT outsourcing organisation
are the focus of this research.
47
Question 2
Question 1
Outcome of IT
outsourcing project
Question 3
Cross-cultural
differences
2.7
Chapter summary
This chapter reviews the extant literature that is highly relevant to the research problem.
Four areas of literature were identified and then explored respectively: IT outsourcing,
the management of IT outsourcing, cross-cultural differences, and managing IT
outsourcing relationships in a cross-cultural context. After charting the direction the
literature has taken and highlighting the important and influential pieces of research
work, this chapter describes the research gaps identified from the existing literature. In
order to fill in the research gaps, the research problem and research questions for this
study were addressed and explained. They were also summarised and portrayed in a
research framework.
The next chapter will introduce and justify the research methodology adopted in the
empirical component of this research.
48
3. Research Methodology
This chapter provides an overview of the research methodology identified as
appropriate for the research questions.
First, the epistemological stance of the research is discussed (Section 3.1). Then, the
research strategy adopted for this study is explained (Section 3.2). Next, the case design
(Section 3.3), data collection (Section 3.4) and data analysis (Section 3.5) for this
research are described. Lastly, quality issues of the interpretive case study research are
acknowledged (Section 3.6) and ethical issues are considered (Section 3.7). Figure 3.1
summarises the chapter structure.
3.1
meaning or intention of the actor. Method, correctly employed, is a means that enables
interpreters to claim a purely theoretical attitude as a disinterested observer. That does
not necessarily deny the fact that, in order to understand the relationship management
process in IT outsourcing, I behaved as an inquirer might have to, as a methodological
requirement, entering into the real life of others.
The procedure or method of this epistemology can draw on the concept of hermeneutic
circle. The process is portrayed as: in order to understand the part (the specific
sentence, utterance, or act), the inquirer must grasp the whole (the complex of intentions,
beliefs, and desires or the text, institutional context, practice, form of life, language
game, and so on), and vice versa (Schwandt, 2000, p. 193). Figure 3.2 shows how the
hermeneutic circle works.
What is to be interpreted
(The part: specific sentence, utterance, or act)
What is to be understood
(The whole: institutional
context)
Figure 3.2: Hermeneutic circle
(Source: Developed for this research)
The hermeneutic circle was applied to this research to reflect the adopted
epistemological stance.
51
3.2
This section describes the appropriate research strategy adopted for this study. A
research strategy is a general plan of how a researcher goes about answering the
research questions that have been set (Saunders et al., 2003). Among the several specific
research strategies indicated in the interpretivism paradigm, case studies were chosen as
appropriate for this study. More specifically, interpretive case studies were applied in
this research. Hence, this section first explains why the case studies strategy is
appropriate for this study. Then it proceeds with the depiction of what kinds of case
studies are specifically adopted in this research.
52
Main strategy in the interpretivist paradigm. According to Walsham (1993), case studies
provide the main vehicle for research in the interpretive tradition.
Given the interpretive stance adopted (Section 3.1) in this study, the researcher
attempted to use case studies to derive her constructs by an in-depth examination of
how relationships of IT outsourcing were managed in a cross-cultural context or
between partners of the same cultural background. Themes or categories emerged that
hopefully were closely linked to the experiences of the relevant project participants
from the IT outsourcing cases.
Addressing the how and why questions. The primary condition for selecting a
research methodology is determining the type of research questions being posed (Emory
and Cooper, 1991). How and why questions favour the use of the case study
strategy (Yin, 1994).
In this study, the researcher aimed to understand how an IT outsourcing relationship is
managed in a cross-cultural context. The case study strategy was preferred to address
such kind of research questions.
Focus on contemporary events. Yin (1994) defines a case study as an empirical inquiry
that investigates a contemporary phenomenon within its real-life context, especially
when the boundaries between phenomenon and context are not clearly defined.
This research dealt with the cross-cultural relationship management in IT outsourcing,
which is a contemporary research issue in the globalisation environment. The research
phenomenon could not be studied outside the research context in which it occurred. The
case study strategy was chosen because of its advantages in creating novel and profound
insights into the research topic in the context of cross-cultural collaboration.
No control over the events by the researcher. A case study strategy is especially useful
in situations where the researcher has no control over the events as they unfold (Yin,
1994).
53
54
were usually discussed in relation to existing knowledge with the aim of demonstrating
how the present study has contributed to expanding the knowledge base.
An interpretive case study can generate both qualitative and quantitative types of data
and the two types inform each other (Bryman, 2001). Interpretive case studies could
also be regarded as ideographic research, which is concerned with a process being
researched in depth (Tsoukas, 1989), and intensive research, whose aim is to generate
understanding of a phenomenon by studying in-depth a small number of cases (Minger,
2003).
This study does not aim to test any hypotheses, as the literature on the management of
the IT outsourcing relationships in a cross-cultural context is less than sufficient for
hypothesis generation. The IT outsourcing activities in a range of different organisations
vary with the organisational idiosyncrasies and environmental complexity. It is regarded
as inappropriate to take findings of other research into this study for testing. This
research intends to analyse and interpret the thoughts and actions of the project
participants when they managed the IT outsourcing relationships. The insights were
generated in the light of the existing theory and the findings from the case analysis were
hoped to expand the current knowledge on the relationship management of IT
outsourcing and cross-cultural differences. The interpretive case studies are thereby
deemed an appropriate strategy for this research.
3.3
Case design
Having identified the interpretive case studies strategy as the one used in this research,
this section explains the case design of this study. An early decision about case design
involves the choice of using a single case or multiple cases, and the identification of the
number of cases. A more comprehensive case design includes cases configuration and
selection. This study adopted a multiple-case design (Yin, 1994) and three cases were
used to explore the research topic. The following issues relating to case design are
discussed in sub-sections:
56
3.3.3
Embedded cases
For the purpose of addressing the current research questions, this research investigated
several IT outsourcing cases in one organisation. The outsourcing organisation
(customer) outsourced several areas of its IT functionality. A number of vendors
supplied the functionality. Some of the vendors had the same cultural background as the
outsourcing organisation, while the other vendors did not. In this sense, each
outsourcing arrangement is identified as one case; and all cases are embedded in one
case organisation.
The benefits of embedding multiple cases in one organisation are manifold. It helps
control for industry and size of the case organisation, which might influence the nature
of relationship management. All cases linking to one customer organisation of IT
outsourcing reduces the problem of incomparability in a range of case organisations.
Furthermore, it is efficient in terms of resources required.
specifically, all the projects were information systems development projects. A project
could vary from development of a range of information services to development of a
small billing application. Appropriate outsourcing cases could be clearly identified by
the existence of a legal contract between the case organisation and its vendors. By
comparing the management of the different projects, insights into relationship
management in a cross-cultural context could be obtained.
59
case organisation (Patton, 1990). In the light of these guidelines, some criteria for
selecting the case organisation for this research were set:
Rich case content (Eisenhardt, 1989). Try to choose an organisation in the relevant
industry that can offer rich case data.
The manufacturing industry was selected because this industry has experienced intense
competition over the last decade. The gains in efficiency of the manufacturing industry
have become essential to the long-term viability of companies. The manufacturing
industry normally involves a variety of decision patterns, reactions, effects and
consequences, which may generate rich case content for this research.
Magnitude of the research (Brief and Dukerich, 1991). The scope and breadth of this
study was defined early in the introduction chapter when the research area was
identified.
The IT outsourcing service in this study refers specifically to the outsourcing of
application development services. Also, this research mainly focused on a service
recipient who was receiving the IT outsourcing services rather than providing the
service. The empirical study should take place in China and the data should be collected
from the Chinese market. Therefore, the selected organisation should be the Chinese
customer organisation which outsourced the application development projects to the
outsider vendors.
Research design (Eisenhardt, 1989). The benefits of embedding multiple cases have
been articulated in the previous paragraph of this sub-section.
To comply with the research design, the case organisation should provide a
representative group of IT outsourcing projects. Some of its vendors had the same
cultural background as the case organisation and other vendors had different cultural
backgrounds.
60
Feasibility of sufficient access (Patton, 1990). Research access is the foremost concern
for all kinds of studies to make the research design feasible and subsequently make the
research happen.
When selecting case organisations, the researcher had to take into consideration whether
the organisation agreed to permit access by the researcher and whether the interviewees
were willing to share their perceptions of the relationship management.
All the company names used throughout this thesis are disguised. The interviewees
from the case organisation requested I suppress all the information which might disclose
the identities of their vendors or disclose the identity of their organisation. They
explained that the request of suppressing their vendors identities complied with the
confidentiality agreement signed between their organisation and its vendor before each
IT outsourcing project, while the request of suppressing the identity of their
organisation derived from the concerns for disclosing their commercial secrets. The
researcher promised to keep all the interview recordings, field notes and archival
documents in a secure place and use pseudonyms or approximate data if necessary in
any thesis or other publication in response to their requests.
The descriptions of the case organisation will be detailed in Chapter 4.
The three IT
outsourcing projects were outsourced to three outside vendors from the year of 2002 to
2003. The vendor of the PDM project is a Western company based in the US; the
vendors providing outsourcing services for the HR project and the CRM project are
61
Chinese. In addition, the three IT outsourcing cases had different project outcomes. The
criteria for case selection in this study are explained in the following paragraphs.
The research design for this study requires that cases should be selected from the case
organisation. The selection of cases primarily relies on theoretical sampling (Eisenhardt,
1989); that is, cases are selected for theoretical reasons, not statistical reasons. Looking
for critical cases is one strategy for selecting theoretical samples (Patton, 1990). As
Eisenhardt (1989) notes, cases may be selected to fill theoretical categories and provide
examples of polar types. Cases that could generate meaningful, highly quality data
should also have the priority for selection (Patton, 1990). Specific criteria for selecting
appropriate cases from the case organisation are:
Theoretical sampling (Eisenhardt, 1989; Patton, 1990). The objective of theoretical
sampling is to uncover a range of possibilities that are theoretically relevant to the
research questions.
In order to examine the management of IT outsourcing relationships in a cross-cultural
context, the IT outsourcing projects with both Western vendors and Chinese vendors are
required. Insights about how to manage the IT outsourcing relationship in a crosscultural context might be generated through the comparison of those two groups of
cases.
Cases of polar types (Eisenhardt, 1989). Given the limited number of cases, it makes
sense to choose cases such as polar types in which the process of interest is
transparently observable (Pettigrew, 1988).
Thereby, the IT outsourcing cases selected from the case organisation had better have
various project outcomes. These kind of polar types are especially useful in observing
the different management practices of IT outsourcing projects which might turn out to
be different outcomes. This is of great importance to address the research questions.
62
Possibility of generating highly valid data (Patton, 1990). Selecting cases that can
generate high quality data (i.e., meet high quality requirements) is another determining
factor.
In this research, all the IT outsourcing cases are expected to have occured recently
within three years. This is because when interviewees are required to retrieve their
experience of managing the IT outsourcing relationships, the influence of arbitrary or
incorrect recollections of the outsourcing project could be decreased to some extent
given the fact that these projects were concluded not long ago.
Figure 3.3 shows the three IT outsourcing cases studied for the purpose of this research.
Detailed information about each case is presented in Chapter 4.
Case 1
Case 2
Case 3
Western vendor:
PT Company
Chinese vendor:
SQ Company
Chinese vendor:
NG Company
PDM Project
HR Project
CRM Project
3.4
Data collection
This section is concerned with how data collection was conducted in the field. The
process of data collection for this research followed a set of principles proposed by
Klein and Myers (1999) and Eisenhardt (1989). Some data collection strategies were
applied to ensure the research followed the protocol for interpretive case studies rather
than positivist case studies.
63
Interviews
Interview guide. In order to guarantee the best use of the limited time available in an
interview situation and meanwhile retain flexibility, three brief interview guides were
developed and customised for three different categories of interviewees (presented in
Appendix A 1.1, Appendix A 1.2 and Appendix A 1.3). These three categories of
interviewees are the executives of the case organisation (i.e. DE Company), the project
participants of the case organisation (i.e. DE Company), and the project participants of
the vendors.
The questions in the interview guide were semi-structured with a list of themes that
were relevant to the research problem, although these varied from interview to interview
depending on the categories of the various interviewees. All the actual questions were
worded in Chinese which is the working language of all the interviewees. The first
section of the interview guide normally started with a short description of the research
aim including asking permission to tape-record the interview. The researcher promised
to suppress the interviewees name in order to encourage the interviewees to talk freely
during the interview. Then, descriptive questions such as some demographic questions
were asked to learn about characteristics of the interviewees, company background and
settings of each IT outsourcing project. Then, structural questions followed in separate
sections relating to the research issues. The interview questions concluded with the
contrast questions to encourage interviewees to verify some key points and address any
further insights which they felt might be appropriate to the research problem.
64
organisation, including six face-to-face interviews and three telephone interviews. Three
informal and brief interviews were conducted with the three project participants from
the vendors side. Each interview lasted between 13 hours. Four interviews agreed to
tape-recording, while the other eight declined. The details of the interviews the
researcher conducted for this study are presented in Appendix C.
Archival documents
The strengths of archival documents can be that they are stable enough to endure
repeated review, are unobtrusive in the sense of not being created as a result of the case
studies, are exact enough to contain details of events, are broad in coverage (i.e. long
time span) and settings, and are precise or quantitative (Yin, 1994). However, the
difficulties in accessibility due to privacy reasons and bias of author or incomplete
collection are the main weaknesses for this source of evidence (Yin, 1994). Therefore,
archival documents were taken as a complementary source of evidence to confirm the
interview data or provide a context for interview data.
Archival data in the form of published reports, internal documents including minutes of
meetings, company brochures, website material, and annual reports of recent years were
collected from the case organisation (i.e. DE Company) and public websites in this
research. Descriptions of the archival documents collected in this study are provided in
Appendix D.
66
Data collection for this study had to be adjusted as the research progressed. The original
plan was to interview those involved in the IT outsourcing project in the case
organisation before February 2005. In fact, interviewing was conducted in four stages
because new demands on data collection arose as the research progressed (refer to
Appendix C).
In the first stage, the researcher interviewed two high-level executives in China in
January 2005 and collected documents from public websites or the interviewees to
understand the organisation history, its owner structure, product-service offering,
culture, specialised vocabulary, and the IS development history of the case organisation.
Familiarising herself with the context allowed the researcher to make additional
judgments about research design and data collection strategies.
In the second stage, after appropriate cases were identified, the face-to-face interviews
were conducted with key case project participants in the case organisation in China.
Then the collected data and the preliminary data analysis were brought back to Australia
in February 2005 and initial data analysis was commenced. The need to add the third
case was identified, as the researcher sensed the collected data were not sufficient
enough to generate valid findings.
In the third stage, three telephone interviews regarding the third case were conducted in
August 2005. This case is of value to illustrate another polar type of IT outsourcing
project: a project that is more successful than the PDM project, but less than successful
than the HR project. The data collected from the third case helped the researcher
improve understanding as to how the case organisation managed the IT outsourcing
relationships with the Chinese vendors. However, when the researcher tried to address
the research questions using the findings generated from the data collected from the
customer organisation, the need to gain some insights from the vendor side became
essential, especially some insights about the perceptions of the cultural differences in
the relationship management.
67
In the fourth stage, two brief interviews were successfully conducted with the HR
vendor and the CRM vendor in February 2006. The impossibility of gaining access to
the vendor of the PDM project forced the researcher to make a compromise. Another
Western vendor of the case organisation was identified; this vendor was willing to
provide insights from the perspective of the Western company. This vendor offered
strategy consulting services rather than IT outsourcing services to DE Company, but it
had the experience of relationship management with DE Company. The three interviews
were specifically used to cross-check the research findings about the cultural differences
in relationship management.
3.5
Data analysis
The analysis of case study evidence is often considered to be the most difficult and most
poorly developed aspect of case study methodology (Eisenhardt, 1989). It makes high
demands on a researchers ability to think, judge, decide, and interpret wisely.
Increasingly, the literature provides guidelines and suggestions to assist in the analysis
of case study data. The following part of this section examines the data analysis
strategies and data analysis process.
particular case (Sabherwal, 2003). Within-case analysis typically involves detailed case
study write-ups for each case (Eisenhardt, 1989). These write-ups are often simply pure
descriptions, but they are central to the generation of insight (Gersick, 1988 Pettigrew,
1988) because they help the researcher to condense the large amount of data in the early
stage.
For the purpose of this current research, the detailed case descriptions are given in
Chapter 4 as the result of within-case analysis.
Cross-case analysis. Cross-case analysis compares across cases, which requires a more
macro view of each case, and cannot be effectively obtained from detailed transcripts
and notes (Sabherwal, 2003). Cross-case analysis is where the researcher needs to
exhibit analytical skills and capabilities (Perry, 1998) and thus should comprise the
majority of the content of the data analysis section. Three tactics are suggested by
Eisenhardt (1989, p. 540): the first tactic is to select categories or dimensions, and then
to look for within-group similarities coupled with inter-group difference; the second
tactic is to select pairs of cases and then to list the similarities and differences between
each pair; the third tactic is to divide the data by data source.
These strategies were used in the data analysis process of the current research to
improve the likelihood of accurate and reliable theory building. The cross-case analysis
for this research is detailed in Chapter 5.
69
Open coding refers to the part of analysis that deals with the labelling and categorising
of phenomena as indicated by the data (Strauss and Corbin, 1990). The product of
labelling and categorising is a set of themes, which are the basic building blocks in
theory construction.
In this study open coding was first performed on the hardcopies of data. Data were
initially broken down by different research issues. While reading the transcripts
concerning each research issue, the comments of interviewees were highlighted. The
highlights help segment the data into relevant and meaningful pieces of text, or units
(Tesch, 1990). Subsequently, data relating to similar incidents were grouped together
and given the same conceptual label. The process of grouping themes at a higher, more
abstract, level is termed categorising (Strauss and Corbin, 1990).
Axial coding puts data back together in new ways by making connections between a
category and its sub-categories (i.e., not between discrete categories which is done in
selective coding) (Strauss and Corbin, 1990).
In this research, all codes/themes, which are the smallest unit of analysis, together with
sub-categories and categories, were organised in a table (presented in Appendix E). This
table presents the labels of codes/themes and categories, provides the descriptions of
each label, and links to each piece of original text from the raw data. The relationships
of codes/themes, sub-categories and categories are exhibited in a hierarchy structure in
this table.
Selective coding involves the integration of the categories that have been developed to
form the initial theoretical framework. It deals with the relationships among discrete
categories (Strauss and Corbin, 1990). Since the analyst cannot readily keep track of
all the categories, properties, hypotheses, and generative questions that evolve from the
analytical process, there must be a system for doing so. The use of memos constitutes
such a system. Memos are not simply ideas. They are involved in the formulation and
revision of theory during the research process. (Corbin and Strauss, 1990, p. 10).
70
In this research, the researcher used pieces of original texts, codes, memos, and case
summaries and linked between them. This helped the researcher decontextualise the
interviewees comments and then recontextualise them. In other words, they enabled the
researcher to take the interviewees comments out of their original context and present
them in a different context.
The approach to presentation of the data analysis is provided in Chapter 4. Excerpts
from the interview transcripts are presented with the findings from the data analysis in
Chapter 4 and Chapter 5, so that readers are able to judge for themselves the validity of
the data analysis in this research.
As all the interviews were conducted in Chinese, only the relevant part of the interview
transcripts was finally translated into English by the researcher. About 30% of the total
amount of data was translated. The condensed transcripts in English involve about five
pages for each interview. The English version of interview transcripts was shared with
other experienced researchers and industry practitioners in workshops to check whether
there were other interpretations available and whether the analysis made sense.
Amendments were made after consulting the experts.
3.6
The criteria for judging the quality of the interpretive case studies differ from those of
traditional ones that positivists normally hold. Merriam (1998) mentioned that
constructs of reliability and validity are not necessarily applicable to interpretive
research. Subjectivity can be considered a threat to valid inferences in interpretive
research. To ensure rigor in theory-building from cases, the researcher applied strategies
to improve reliability, validity and authenticity.
In the interpretive case studies, reliability means dependability or consistency in
conducting research, collecting and interpreting data (Neuman, 2003). Reliability was
improved by using a case study research protocol and database during the stage of
crafting instruments and protocols of this research.
Validity means truthfulness and refers to the relation between constructs and data
(Neuman, 2003). As to this study, strategies such as triangulation (using multiple data
sources and multiple perspectives from interviewees to confirm emerging findings and
multiple units of analysis) and examination by experienced academics (i.e., the
supervisors of the researcher) were applied to enhance validity. Besides this, one should
be cautious when translating these transcripts from Chinese to English.
Authenticity for qualitative researchers is more important: authentic accounts give a fair,
honest and balanced interpretation of social life that is true to the experiences of people
72
3.7
Ethical considerations are important in any research that employs human subjects
(Emory and Cooper, 1990). The primary purpose of research ethics is to protect all
parties involved from harm and adverse consequences resulting from involvement in the
research (Emory and Cooper, 1990; Patton, 1990).
In this research strict ethical procedures were applied throughout the research process.
For instance, participation was voluntary and participants were fully informed regarding
the nature of the research. Permission of tape-recording during the period of interviews
was sought in advance. The researcher maintained confidentiality of all commercially
sensitive documents, even though many were not under non-disclosure protection. At all
times the interviewees right of privacy was respected. The researcher adhered to ethical
codes of the University of NSW Human Research Ethics committee. The potential
ethical problems were addressed with careful planning and attention to detail. The
ethical impact of this research was evaluated as minimal by the Human Research Ethics
Advisory panel of UNSW.
3.8
Chapter summary
This chapter gives a comprehensive picture of how this research was conducted. The
epistemological stance this research takes is interpretivism. Case studies were adopted
as the research strategy for this research. More specifically, the interpretive case studies
were deemed appropriate for this research. Then, three cases were identified and all the
cases are embedded in one organisation in China. This case organisation is the customer
who received the IT outsourcing services. Data were collected from the interviews and
archival documents, both at the customer side and the vendor side. The data analysis
followed the guidelines for the interpretive studies. In order to improve the quality of
73
the interpretive case studies, some strategies were applied in this research. Finally, the
ethical considerations were also acknowledged.
The next chapter presents the description of the case organisation and the three IT
outsourcing cases.
74
Description of the
case organisation
(Section 4.2)
PDM case
(Section 4.3)
HR case
(Section 4.4)
CRM case
(Section 4.5)
75
4.1
The case study analysis procedures, including data analysis methods, were discussed in
Chapter 3. This section describes the approach to presenting the analysis of the collected
data and presenting the interpretation of the findings from the data analysis. The
following issues are discussed in detail: approach for organising the data, data
presentation, use of quotes, presentation syntax, and confidentiality.
Approach for organising the data. The data collected from the field incorporates twelve
interviews and twelve archival documents, totalling some 300 pages of text. Techniques
such as computer-aided text analysis are suggested to deal with large volumes of
information in qualitative research textbooks (e.g., Yin, 1994). However, the archival
documents in this research unfolded in a clear-cut structure and the interviews normally
proceeded in good order and hence were easy to compare with each other. When the
researcher attempted to explore a specific issue, it did not take time to target the
appropriate texts from the empirical materials. There were seldom occasions that
required collecting information from lots of scattered sources. Therefore, the approach
of computer-aided analysis was not a necessity in this research and was taken over by
traditional approaches of manual analysis by the researcher to organise the qualitative
data from the field.
Data presentation. The most common responses to research questions were summarised
by theme. These themes were identified from open coding to represent the same
meaning which might be expressed in various ways. The themes evolved into a stable
set of categories that denoted more abstract concepts. The properties (characteristics)
and dimensions (range) of each category are identified to unite certain influences
beneath a single conceptual heading (Goulding, 1999). Where necessary, the categories
were further broken down into subcategories to attach greater explanatory power to
concepts which might relate to a particular phenomenon or to answer such questions as
when, where, why, how and with what. In addition, figures and tables are often
76
used to summarise findings or provide visual comparison across cases. The themes,
categories and properties/dimensions developed for this research are presented in
Appendix E.
Use of quotes. Themes, categories and properties/dimensions are underpinned by data
evidence and are supported by selected quotes from the interviews. The use of quotes in
presenting the findings increases the transparency of reporting research; i.e. it allows the
reader to trace the researchers steps from the data collection to the presentation and
interpretation of the results (Sandelowski, 1994). Quotes were purposefully selected to
enhance understanding of specific themes or categories.
Presentation syntax. The syntax in presentation accounts for the context of time and
place. Normally, the findings are expressed in the past tense, reflecting that the data was
collected in the past (in January 2005, August 2005 and February 2006). But where the
situation had not changed when the thesis was being written up, or when the patterns
and themes are introduced as a theory, the present tense is used because they still exist
now (in late 2005 and early 2006).
4.2
The three cases studied for this research concern IT outsourcing projects undertaken by
one organisation: DE Company. In order to understand the three cases and analyse the
data appropriately, it is important for the researcher (and the reader) to understand the
organisational and historical context of the case organisation. This section first reviews
the organisational background of DE Company and briefly discusses the companys IS
development history. Three phases of IS development at DE Company are identified
and it is during the last phase that the three selected cases were implemented. These
three phases are discussed respectively along with the business environment of each
phase. Lastly, a summary of the IS development in DE Company is presented.
77
78
79
Phase 1
Stage 1 of CIMS
(Computer
Integrated
Manufacturing
System)
Phase 2
Stage 2 of CIMS
(Computer Integrated
Manufacturing System)
Phase 3
Outsourcing of
three IT projects
95 96 97 98 99 00 01 02 03 04 05 06 Year
Figure 4.2: Three phases of DE Companys IS development
(Source: Developed for this research)
External environment
In 1995 Chinese enterprises started to be aware of the concept of information systems
(IS). In order to speed up adoption of IS, the Chinese government decided to establish a
fund for encouraging large state-owned companies to adopt information systems.
Although China was changing to a market-oriented economy, its economy was still
largely centrally planned. The Chinese government still took a leading role in directing
state-owned companies to implement new technologies for industry use. At that time,
DE Company had been a listed company on the Shanghai stock exchange for several
80
years. It had become imperative for DE Company to improve its internal operations so
that the requirements for a listed company could be met. Using IS to improve
management efficiency and effectiveness became an important strategy for many listed
companies in China.
At that time, the machinery industry that DE Company was operating in, particularly the
diesel engine market, was booming with the rapid development of Chinas economy
(ISH_DE, 2004). This attracted many new entrants to the industry and benefited the
rapid expansion of existing participants. More than ten companies had the capabilities to
challenge the leadership of DE Company at that time (ISH_DE, 2004). In addition,
many diesel engine manufacturers formed alliances with auto manufacturers, which
changed the nature of competition in the machinery industry. Furthermore, environment
regulators increasingly compelled manufacturers to provide diesel engines with greater
energy conservation and less pollution. DE Company was unable to adapt quickly to the
changes and lost its leading position in the industry (ANR_DE, 1995; ISH_DE, 2004).
Internal environment
Although DE Company successfully changed its governance structure to meet the
requirements of a listed company, its internal operation remained outdated (ISH_DE,
2004). Collection and analysis of manufacturing data was still performed manually.
This caused delayed information feedback, misunderstanding in communication, and
difficulties in collaboration. Senior executives were not able to make a fast and
appropriate decision due to incomplete and inaccurate information. The manual
approach to managing the design data led to a long product design cycle. This resulted
in a high rejection rate for the finished product (ISH_DE, 2004).
IS project(s)
At the first stage of the CIMS project, the primary task of DE Company was to establish
reliable infrastructure and electronic management of some key data with the aid of
81
several interconnected computers (ISH_DE, 2004). DEs executives did not know that
IS could facilitate cross-functional collaboration and hence did not address such
functionality in the first stage of the project. However, management of DE Company
were now aware that IS helped improve management efficiency (ISH_DE, 2004).
DE Company implemented an engineering information system project and a
management information system project. Each project got financial support of 9
million (approximately 1.2 million US$) from the government (PPF_DE, 2004). The
two systems were planned to be integrated with each other in order to remove
bottlenecks in manufacture scheduling, product design and product manufacturing.
There were more than 20 employees working in the IS department of DE Company
during this period (ISH_DE, 2004). Most had no prior experience in developing
information systems. China lacked quality software for engineering management or
product design or the software packages available were not suited to the unique
requirements of DE Company. Therefore, senior executives decided to jointly develop
the information systems with LC Software Company and J University which had a
CIMS research centre (PPF_DE, 2004). LC Software Company was a local software
provider located in north China while J University was a prestigious university that
specialised in engineering.
work well, especially when design data needed frequent change upon the request of
customers (ISH_DE, 2004). The production schedule system was only applicable in the
manufacture of DEs 135-model diesel engine (which is one of the companys four
manufacturing lines). This was due to software design problems with the BOM system
(ISH_DE, 2004).
Despite its limited success, the first stage of the CIMS project nevertheless passed the
final CIMS evaluation and gained positive feedback from the government in 1997
(PPF_DE, 2004). All the employees of DE Company acknowledged that they had learnt
a lot and accumulated much experience in information systems development from their
involvement in this project (ISH_DE, 2004).
External environment
In the late 1990s, the Chinese government took steps to stimulate domestic demand
(ISH_DE, 2004). Competition in the machinery industry intensified. Customers
demanded higher performance and greater reliability from diesel engines. Foreign
competitors started to consider entering Chinas market after China entered the World
Trade Organisation (WTO) in 2001 (ISH_DE, 2004). DE Company realised that in the
long run domestic manufacturers of diesel engines would be seriously threatened by
multinational companies despite the disadvantages they had in price and post-sales
service.
83
The industry ranking of DE Company fell again in 1999 (ANR_DE, 1999; ISH_DE,
2004). The main reason was attributed to its slow response to market changes and
inefficient internal management (ISH_DE, 2004).
Internal environment
In 2000, DE Company developed an emergency plan to address its internal management,
business expansion and new product development strategies (ISH_DE, 2004).
Management saw IS as an enabler to improve internal management efficiencies and to
shorten the life cycle of new product development. They created a new IT department
that was given comprehensive executive powers. The newly structured IT department
was authorised to coordinate with other departments in developing information systems
(PPF_DE, 2004).
IS project(s)
During the first stage of CIMS, DE Company had already developed some isolated
subsystems which supported the business operation to some extent. Having worked with
these subsystems for three years, DEs employees gradually got familiar with IS and
identified new requirements for upgrading these subsystems (ISH_DE, 2004). In the
first months of 1999, IT employees strived to customise and extend existing
functionalities; but later on they came to realise the importance of establishing an
overall system architecture to help integrate isolated subsystems (ISH_DE, 2004). With
the help of Machinery and Computers Company, a local system provider that mainly
services the machinery industry, a system platform named 3S2000 system was
developed to partly solve the problem of interconnectability in the year of 2000
(ISH_DE, 2004). A financial information system, which was initially bought during the
first phase of IS development, was implemented successfully at this stage. New
functionalities were also developed by DEs IT employees in response to the new
84
85
Table 4.1: Subsystems developed at the second stage of the CIMS project
Subsystem
Upgrading or new
development
Product design
Upgrading
Product engineering
Manufacturing scheduling
Upgrading
Manufacturing
Upgrading
Product design
Product engineering
Sales management
New development
Inventory management
Upgrading
Financial management
Upgrading
Sales management
Upgrading
Supplier management
New development
Manufacturing
New development
3S2000 system
New development
External environment
Benefiting from Chinas rapid economic progress, DE Company faced a booming
market. The real estate market grew very fast in big cities like Beijing and Shanghai,
which stimulated a new wave of demand for diesel engines used in construction
(ISH_DE, 2004). DE Company hoped to seize this opportunity to expand its market
share. Sales reached 100 thousand diesel engines in 2004, which was double the number
sold in 2002 (ANR, 2002; 2003; 2004; REN_DE, 2005).
The competition structure in the diesel engine industry continued to change after 2002
(REN_DE, 2005). Some overseas competitors in the diesel engine industry entered into
the Chinese market through joint ventures or collaboration with local manufacturers,
while domestic competitors also strived for market share (ISH_DE, 2004; REN_DE,
2005). Compared with the current market leader, DE Company lagged far behind and
the gap has further widened in recent years. However, its industry ranking returned to
the top tier (consisting of the top five or top ten), which indicates the success of DE
Company during this period (ANR, 2004; ISH_DE, 2004; REN_DE, 2005).
Internal environment
87
IS project(s)
Three IS projects were carried out during this period. These three projects are the three
cases for this research. The following briefly outlines the projects; a detailed description
of the cases is presented throughout Section 4.3 to Section 4.5.
The first project was initiated in 2002 when DE Company found inconsistencies in
product records among different subsystems. DE Company knew that the main task
every manufacturer has to face when adopting IS is to properly specify the source data
and to make it consistent for tracing throughout the whole product life cycle. Hence, DE
Company considered implementing a Product Data Management (PDM) system, which
aimed to integrate all the existing subsystems and to establish a product database used
by all the existing subsystems (ISH_DE, 2004; ISP_DE, 2002). DE Company decided
to outsource this project to PT Company, a world leader in the area of manufacturing
industry headquartered in the United States (STO_PT, 2005). The project started in
December 2002 and was concluded at the end of 2003 (ISH_DE, 2004; ISP_DE, 2004).
DE Company regarded the PDM project as the most challenging but influential IS
88
project in its IS development history, despite the fact that interviewees showed
dissatisfaction with the project outcome.
In late 2002 DE Company considered the development of a human resource (HR)
information system. The new HR system was expected to be capable of providing more
efficient personnel administration and more accessible information for management
(ISH_DE, 2004; ISP_DE, 2004). The project became a top priority when senior
management realised that the HR system would be able to deliver immediate value to
every employee in the organisation (ISH_DE, 2004). DE Company cooperated with a
local provider, SQ Company, and signed a contract to outsource its HR system
development. The contract specified that the project would start in January 2003 and
delivery of the HR system would be completed by September 2003 (ISH_DE, 2004;
ISP_DE, 2004).
In mid-2003 the marketing department of DE Company expressed a strong wish to
develop a customer relation management (CRM) system. The need to develop a CRM
system became urgent when DE Company found it had no specialised information
system to effectively deal with its expanding market (ISH_DE, 2004). In order to
capture the opportunity presented by high growing demand, DE Company hoped the
new CRM system could help improve its capability to manage its new customers as
well as retain its old customers. DE Company finally outsourced the project to a local
vendor, NG Company, who had successfully promoted CRM systems among a number
of organisations in China (STO_NG, 2005). This project started in early 2004 and had
not yet been concluded when interviews were conducted in August 2005.
Apart from these three outsourcing projects, DE Company also upgraded its inventory
control system and other related systems to adapt them to the new PDM system. A barcode system was also developed during this period.
89
90
Phase 1
Phase 2
Phase 3
of business
PDM
impact of
IS project
CRM
Stage 2 of
HR
Stage 1 of
Bar-code
Small projects to automate
95 96 97 98 99 00 01 02 03 04 05 06 Year
Figure 4.3: DEs IS Development projects and their business impact
(Source: Developed for this research)
4.3
This section first describes the PDM project. Then the within-case analysis summarises
what the researcher found that sheds light on the three research questions. The
supporting quotes are also provided if necessary.
urgent need for DE Company to specify the source data in a uniform format and keep
the data consistent through each step of the product lifecycle. In September 2002, DE
Company decided to develop a Product Data Management (PDM) system. The PDM
system was expected to lay a solid foundation for future implementation of an enterprise
resource planning (ERP) system. DE Company chose to outsource the PDM project
rather than develop it, because the strategy of DE Company at that time was to focus on
its core business of manufacturing diesel engines (ISSP_DE, 2002; RSD_DE, 2002).
DE Company also hoped that outsourcing the PDM system could help them access
world-class manufacturing practices. Hence, DE Company set its sights on overseas
vendors. The Chief Information Officer (CIO) of DE Company explained to the
researcher why DE Company decided to outsource:
The organisation should not focus on the development of software but on the
improvement of design technology of diesel engines and expansion of its
business. Meanwhile, domestic vendors are inexperienced and do not have
adequate capabilities in developing such a significant project like the PDM
system. We would like to tap into the world-leading technology by considering
outsourcing the project to a prestigious overseas provider (CIO of DE
Company)
After careful evaluation, two vendors were identified as final candidates BM
Company and PT Company. It was believed that both vendors had the capability to
offer an advanced and extendable system with a complete solution for integration with a
future ERP system. DE Company was satisfied with the extensive experience both
companies had in working with various world-class organisations. DE Company
believed BMs product represented an integrated solution with powerful functionality,
whereas PTs product was perceived to be a good example of a product of an industry
specialist (DRA, 2004; ISH_DE, 2004). In the end, DE Company chose PT Company as
the vendor for its PDM system which showed its preference for an IT company with
specialised industry experience.
92
five senior managers including the vice president of the company. The project team was
made up of seven IT staff and ten business managers. The organisational structure for
the PDM project is described in Figure 4.4. The line between the solid line boxes means
the two groups of members directly interacted during the project.
PT Company
DE Company
1 Sales
representative
Steering Committee
(5 senior executives)
Project team
(4 system
developers)
Project team
(7 IT staff and 10
business managers)
DE Company and the vendor, PT Company, collaborated with each other throughout
the project including the development and the implementation of the PDM system. The
newly developed PDM system went through testing in October 2003. The
implementation work in different departments of DE Company used a phase-in
approach. The progress of the PDM project is presented in Figure 4.5.
94
2001
Jan
2002
2003
Sep Dec
2004
Oct Dec
2005
Oct
Considering the
Vendor
System
System
introduction of
selection
development
migration and
PDM system
and
Project
System
negotiation
started
test
Jan Jun
implementation
Contract
Project
signed
ended
1st stage of
PDM project
of PDM project
In the PDM project, DE Company and its vendor had no prior collaboration experience.
DE Company expected a partnership style relationship including risk and benefit
sharing when the contract was signed. But they formed only a transactional (impersonal,
overly structured, and governed mostly through the formal contract) relationship when
the project was concluded. All of the interviewees agreed that the development of the
relationship was less than satisfactory. For example, one project team member of DE
Company said:
We [DE Company and its vendor] had only a contractual relationship [in
Chinese culture, the contractual relationship here has a negative meaning].
They seemed polite when talking with us, but were really difficult to approach.
However, we expected a relationship like partnership or like friends in addition
to the contract (PDM project team member of DE Company)
Contract implementation, trust building, and the value the vendor delivered to the
project were identified as the distinguishing characteristics of an IT outsourcing
relationship when the interviewees described and explained the relationship with the
PDM vendor. Staff of DE Company perceived that the vendor only focused on contract
implementation and did not make time to establish trust between the two project teams
when they described the relationship. As the CIO of DE Company said:
We [DE staff] expected to learn the best management practice of the top
mechanism company through cooperation with our vendor. However, they gave
limited help in the project They adhered too much to the contractThe postsale support only took the responsibility to provide explanations to the system
and to offer training on how to use the new system It was of little help...
(CIO of DE Company)
96
Research question two: How does relationship management influence the outcome
of an IT outsourcing project
The interviewees in the PDM project perceived the PDM vendor as a good contract
maker. They admitted that a comprehensive and well-prepared contract might help
improve the possibility of implementing the contract successfully in the PDM project.
However, they also argued that the PDM vendor should not implement the contract
literally regardless of newly addressed requirements by the customer organisation,
which might lead to a successful contract implementation but might lower satisfaction.
The statement of the CIO of DE Company could be an example:
Our vendor completely implemented the contract and cleared the accounts.
From the contract perspective, it is successful. The vendor achieved almost all
clauses specified in the contract. However, we are not satisfied with the project
outcome. It was quite normal for us to change some requirements when we
were not familiar with the PDM system, while the vendor appeared reluctant to
change if it was not included in the contract. The current use of PDM system is
pretty limited (CIO of DE Company)
Communication between DE Company and its vendor was not effective in the PDM
project according to interview data. This was regarded as the main explanation for
different understandings of system requirement and different expectations on the project
objective, which was perceived to influence final system implementation and end-user
satisfaction. The PDM project manager of DE Company also commented:
The delayed understanding really restricted us to address appropriate
requirements. This might lead to the disappointing project outcomes (PDM
project manager of DE Company)
The interviewees told the researcher that the two project teams were not familiar with
each other before the PDM project and did not have sufficient chances to interact during
97
the project. The vendor was perceived to be incapable of explaining the newly
developed system in the language of the end-users, and thus the two project teams could
not grasp each others correct meanings, which restricted the vendor from realising its
true value. Then trust building and eventual project outcomes were also influenced. The
quote below supports the above summaries:
We were not familiar with each other. We found they were incapable of
explaining the system in the language of the end-users. We could not correctly
grasp the meaning of the new system and hence might not feel the true value of
our vendor (PDM project manager of DE Company)
DE staff were not satisfied with the human resources PDM vendor allocated to the PDM
project. The project manager of PDM vendor, a PhD graduate who had less than three
years working experience, was perceived to lack industry experience and management
skills. The sales representative who took the key role in coordinating the project was
perceived to be inappropriate and to lack authority. These all made DE interviewees
doubt whether the PDM project was a successful investment:
the system developers assigned for this project were technical experts who
did not have adequate industry experience by my observation. The project
manager from the vendor is a PhD graduate who has worked for less than
three years. He did not show his qualified capability in coordinating and
managing the project, let alone understanding what we were thinking about
and worrying about. It is a factor that led to unsatisfactory result (PDM
project team member of DE Company)
z
Interviewees from DE Company perceived that staff from the PDM vendor were
accustomed to developing trust by means of abiding by the contract or agreement. Once
98
a deadline was agreed in a contract, the vendor did their best to meet the deadline in
order to win the other partys trust. The vendor appeared to be sensitive and reluctant to
accept any work scope changes against the contract. However, employees in DE
Company preferred to develop trust by exchanging favours. The interviewees thought
that a sound relationship would be formed when both parties are considerate, helpful,
and generous. DE interviewees also told the researcher that people from PDM vendor
tend to rely on the tangible agreement or contract to govern the business activity
explicitly, while they do not feel comfortable about this. A project team member of DE
Company described these differences:
It is quite common for new requirements to be addressed when implementing
the contract But they insisted that they should adhere to the contract first in
order to complete it in time They [PDM vendor] preferred to self evaluate
their work against the contract
Company)
Some of the DE interviewees felt that staff from the PDM vendor liked to have planned
or scheduled communications and communicated with project team of DE Company in
a formal, impersonal, or business-like manner in order to show their professionalism. In
contrast, DE staff felt that communicating in a formal manner would dampen
enthusiasms in establishing close working relationships. For example, one project team
member of DE Company told the researcher that:
Their over-formal style of communication always reminded us that we [DE
employees and the PDM vendors employees] were only in a contractual
relationship [in Chinese culture, the contractual relationship here has a
negative meaning]. They seemed polite when talking with us, but were difficult
to really approach... Gradually, we were reluctant to express our true feelings
to them, as they never treated us as friends (PDM project team member of
DE Company)
99
DE interviewees told the researcher that they tried hard to establish mutual interests
with the PDM vendor in the project. That is why they divided the PDM project into two
stages, hoping to imply to the vendor that if they performed well in the first stage of the
PDM project they were likely to get the second stage of the PDM project easily.
However, the vendors work did not satisfy DE Company. For example, the vice
president of DE Company said:
PDM project was of strategic significance to us [DE Company]. We took
great efforts to establish mutual goals with our vendor [PT Company]We
[DE Company] implied that if we could get along well with each other in the
first stage of PDM project, we would consider contracting the second stage of
PDM project to them [PDM vendor] I thought that the vendor knew our
mutual interestsBut what a pity, we [DE Company and its PDM vendor] did
not establish a long-term partnership in the end (Vice president of DE
Company)
DE interviewees showed their special attention to the establishment of social/personal
bonds. They believed that, to project team members, social/personal bonds were
important when collaborating with partners. If Guanxi was felt, a trust between two
parties could be established immediately despite the fact that the two parties had no
prior business relationships. Guanxi is defined as friendship with continuous exchange
of favours (Pye, 1982). Tsui and Farh (1997) concluded that 'relationships based on
common ground' are the essence of Guanxi. In Chinese society, Guanxi means the
network of relationships among various people or parties that exchange favours, which
are expected to be done regularly and voluntarily. Guanxi (social/personal bonds) is
used to resolve some of the problems encountered between different parties in Chinese
society.
In contrast, although the PDM vendor might understand that the existence of
social/personal bonds help to promote business partnerships, their behaviour showed
their belief that social/personal bonds could not substitute for a formal business
100
relationship in order to foster trust. A project team member of DE Company stated his
opinion:
We [DE Company] don't know any of the project team members from the
vendor side before. We could collaborate with each other in a business manner,
but I never expect the mutual trust or understanding would happen through
merely business relationships. Sincerity or trust easily happens to my familiar
friend or my Guanxi network (PDM Project team member of DE Company)
DE interviewees also felt uncomfortable about the human resources its vendor invested
into the PDM project. For instance, the vendor assigned a sales representative to take a
key role in the project. Technical experts including system developers or even project
managers followed the instructions of the sales representative. However, in the mind of
DE staff, sales or marketing people are not as authoritative as technical experts who can
solve the problems with their technical talent in the organisation. The DE staff also
doubted the qualifications of the project manager from the vendor, because the project
manager was a PhD graduate who had no more than three years industry experience.
The words of the PDM project manager of DE Company could partially support the
above perceptions:
I could hardly believe that PT Company assigned a sales representative to
take the key role in the project. I always doubted whether he could understand
the requirements our technical experts addressed in the daily workplace
Sometimes we [DE employees] felt the vendor was probably unconcerned with
our project. However, the project was very important to us. Our most excellent
IT experts and diesel engineers were assigned to this project (PDM project
manager of DE Company)
101
4.4
This section begins with a description of the second case the HR project. Then the
within-case analysis explores the HR case and summarises the findings regarding the
three research questions. The supporting quotes are provided if necessary.
access information on career development and position descriptions (ISP, 2002). In the
end, two functions (personnel administration and management information), became the
main system requirements for the HR system.
DE Company had the capability to develop a HR system by itself, but it decided to
outsource the project to an outsider vendor, which was deemed relevant to its strategy
of focusing on the core business. According to the HR project manager,
Outsourcing could also lower system development cost compared with selfdevelopment (HR project manager of DE Company)
There were plenty of domestic vendors who could offer a mature HR system. The HR
system packages in the market ranged from standard systems (widely used
internationally) to semi-structured systems (which could be customised to meet unique
requirements). Senior executives in DE Company knew that, as a traditional stateowned company, DE Company had specific personnel administration practices with
particular Chinese business characteristics. Generic HR software packages might work
well in Western companies but would not fit the requirements of DE Company.
Industry expertise was another key concern when DE Company selected its vendor.
Therefore, DE Company decided to contract the HR system to its holding company, SQ
Company, whose employees mostly came from the IT department of DE Company and
participated in the first two phases of DEs IS development. DE Company strongly felt
that nobody else could better understand their system requirements than their former
employees. The HR project manager explained why DE Company selected SQ
Company to be the outsourcing vendor for the HR project:
We [DE Company] had a unique HR management process and I was afraid
that many mature HR systems on the market could not cater to our needs. SQ
Company was the first one we thought of because no one else could know our
business better than this company (HR project manager of DE Company)
103
104
SQ Company
DE Company
1 project
manager
1 project
manager
4 system
developers
4 IT staff and
2 HR managers
105
2002
Mar
Sep
2003
Jan
2004
Evaluation
Vendor
System
System
of
selection
development
migration and
introducing
and
System
an HR
negotiation
tested
system
Contract
Project
Project
signed
started
ended
2005
Jan
Aug Sep
implementation
All the interviewees agreed that DE Company strengthened the partnership relationship
with its vendor, SQ Company, through the HR project. They said that they were
satisfied with this relationship. For example:
We were happy about how the partnership was maintained and strengthened
through the HR project. I thought it should be regarded as long-term
106
partnership. We trusted our friend [before the project]. As a result [after the
project], they did not disappoint us (HR project team member of DE
Company)
Sometimes the relationship appeared to be personal or informal in the HR project. The
interviewees explained that it was because the backbone of the HR vendor came from
the previous IT department of DE Company and DE Company is one of the key owners
of the HR vendor.
When the interviewees described the reasons why they perceived the relationship as
satisfactory, they mentioned the following themes: successful contract implementation,
established trust, the high value SQ Company brought to them, the open and flexible
attitude of HR vendor towards any requirement changes of the new developed HR
system, and the effective communication between the two project teams. As such, these
five themes were identified as the distinguishing characteristics of a satisfactory
relationship in an HR case.
z
Research question two: How does relationship management influence the outcome
of an IT outsourcing project
DE Company and the HR vendor had a brief and flexible contract. If any new system
requirements were addressed by DE Company, its vendor would actively respond to
them although it might increase the vendors cost to manage the HR project. The HR
vendor never asked for additional charges if what they went beyond the work scope
specified by the contract. This might be the main reason why all the DE interviewees
felt satisfied with the HR vendors work and the new developed system was
successfully adopted in practice soon after the project. The statement of the HR project
manager of DE Company is an example:
The HR vendor is one of a few trustworthy partners we could rely on. When
we met with any problems with the system, they were able to come to our
107
company in half an hour to help us solve the problem even when the contract
was over They never asked for additional charges if what they did had gone
beyond the work scope specified by the contract (HR project manager of
DE Company)
Project members from the two companies were familiar with each other. They had
established close personal/social bonds before the project; hence they communicated
effectively in the project. This might have helped the vendor better understand the
system requirements and better deliver the vendors value to DE Company. This also
increased mutual trust and positively influenced the ultimate system adoption. DE staff
became more confident in IS development within DE Company after the HR project.
The quote below is from HR project team member of DE Company:
we could chat freely and be like friends. This kind of communication helped
us strengthen our personal bonds. So our project team members would like to
trust each other and share every idea with themThis benefited the ultimate
success of our project (HR project team member of DE Company)
DE interviewees also perceived that the special relationship (i.e. DE Company is the
parent company of the HR vendor) between these two companies led to common
interests in the HR project. This could explain why the HR vendor generously invested
its resources into the HR project. This was also perceived to strengthen their mutual
trust and increased the satisfaction of end-users in DE Company. The quote from the
vice president of DE Company could be taken as an example:
If two parties had less conflicting interests, they were willing to invest more
resources to the project and they will not be too mean about money. That was
why we and our vendor dared to rely on each other and trusted each other
Hence, the project was easy to run (Vice president of DE Company)
z
an over-formal tone when we had any conversations about the project (HR
project team member of DE Company)
The vendor specifically assigned system developers who had worked in the IT
department of DE Company before to the HR project. Hence, most of the project team
members in the two companies already had established close social/personal bonds
before the HR project. DE interviewees perceived this type of social/personal bonds as
important to maintain a good working relationship and establish mutual trust in the
project. The social/personal bonds were also regarded as helpful to improve the
efficiency of the communication. The following representative quote is from an HR
project team member of DE Company:
The project manager of the vendor and I were former colleagues in the IT
department of DE Company and close friends as well. We graduated from the
same university... we had established tight social bonds I could fully
understand why our vendor assigned him to the HR project and authorised him
to take charge of the whole project. We trusted him and the team he led
because we had a lot of common experience before through which we had
established tight social bonds (HR project team member of DE Company)
All the project team members from the HR vendor were IT specialists or experienced
industry experts. They gained great respect from DE staff. Their suggestions were easy
to be accepted and to be put into practice by the end-users of DE Company.
Some implications about cross-cultural differences might be generated if the above data,
together with the data collected from the CRM case that involves another Chinese
vendor, are compared with data from the PDM case that involves a Western vendor.
110
4.5
This section describes the third case the CRM project and then the within-case
analysis summarises the findings regarding the three research questions. The supporting
quotes are provided if necessary.
In September 2003, NG Company assigned one full-time technical manager and one
system analyst from its Shanghai office to work on DEs site for three months. The head
of the Shanghai office of NG Company took on the responsibility of project manager.
The project team from Shanghai office collaborated with system developers in NG
Companys headquarters (in a different city). At DE Company, two IT staff and two
marketing staff formed the project team and took charge of the CRM project. The
Shanghai office of NG Company created a bridge between the system users (on DEs
side) and the system developers (on NGs side). The organisational structure for the
CRM project is shown in Figure 4.8. The line between the solid line boxes means the
two groups of members directly interacted during the project.
NG Company
6 system
developers in
the
headquarters
(in a different
city)
DE Company
Project manager
(IT staff)
1 IT staff and
2 marketing
managers
The CRM project was divided into stages for developing different functionalities of the
CRM system. NG Company spent almost three months to conduct analysis for branch
inventory management. It seemed impossible to complete the whole project on time.
Therefore, the two parties signed a complementary contract in December 2003, creating
a new timetable for completion of the CRM project. The failure to keep up with the
original project schedule was explained by the CRM project member of DE Company:
114
quickly
when
we
signed
the
contract,
there
existed
great
the project team from Shanghai office were dismissed by NG Company so that system
developers in the headquarters of NG Company interacted with DEs project team
directly. It took DE Company three months to test the two functionalities and another
three months for implementation. In December 2004, the direct and post-sales modules
went live. Development of the other two functionalities had not yet started when the
interviews for CRM project were conducted (August 2005). The deadline (December
2004) stated in the complementary contract was not achieved. The progress of the CRM
project is presented in Figure 4.9.
2003
Aug
2004
Sep
Nov
Dec
May
2005
Aug
Dec
Considering
Requirement
P&S
P&S
P&S
the
analysis
development
testing
implementation
introduction
Proposed
CM and CT
Contract
of CRM
Aug
signed
system
System
Project
Complementary
started
contract signed
selection
and
negotiation
IM
development
IM went live
Note:
IM: functionality of branches inventory management
P&S: functionality of post-sales and functionality of direct sales
CM: functionality of customer management
CT: functionality of customer e-training
DE Company considered the relationship with the CRM vendor to be on the right track
to partnership when the interview was conducted. It was the first time that the two
companies collaborated with each other on business. And the CRM project had less
strategic significance compared to the PDM project in DE Company. As such, DE
Company did not expect too much partnership building. The relationship experienced
ups and downs during the project. But finally, due to the efforts of both parties, their
relationship became closer and closer. They perceived the relationship with the CRM
vendor as moderately satisfactory and showed their confidence in establishing the
partnership in the near future.
Interviewees in the CRM project mentioned four main themes to describe the
moderately satisfactory relationship: the disappointing contract implementation, the
great price concession the CRM vendor gave in the outsourcing contract, the gradually
established trust, and the real benefits the new developed CRM system brought to DE
Companys sales function. These themes were identified as the distinguishing
characteristics of the IT outsourcing relationship in the CRM case. The CRM project
manager of DE Company told us part of this story:
We [DE Company and NG Company] were on the way to partnership if we
had not been the partners Our vendor showed the sincereness of building
partnership by giving concessions on contract price... When lots of bugs were
found in the post-sale and direct sale functionalities the end-users of these
117
Research question two: How does relationship management influence the outcome
of an IT outsourcing project?
DE interviewees told the researcher that the CRM vendor spent little time on contract
preparation and gave great price concessions to the CRM project. They seemed to be
more concerned with establishing a long-term partnership with DE Company. The CRM
vendor did not perform well on contract implementation. They did not accomplish the
task specified in the contract. This led to a trust crisis during the CRM project. However,
the vendor quickly called a special meeting and organised an emergency team to cope
with the crisis in order to maintain a good relationship with DE Company. The
continuous efforts paid by the CRM vendor finally won the trust of its customer
organisation, DE Company. At the end of the project, DE staff acknowledged the value
the vendor brought to their company and expressed their confidence in establishing
partnership in the near future. The statement of a CRM project team member of DE
Company could support the above arguments:
In December 2003, the vendor came into the first trust crisis ever. They failed
to meet the deadline of delivering all functionalities. They delivered the first
functionality which contained lots of bugs. Their board chairperson quickly
created an express way for us to mend the system. We could see that they were
sincere in establishing partnerships with us. So we decided to give our vendor
more time. They prepared another complementary contract to eliminate our
118
worries. After a short period of bug shooting, the first functionality successfully
went live (CRM project team member of DE Company)
The DE interviewees pointed out that the effective communication the vendor facilitated,
especially when the trust crisis occurred, and the continuously increasing resources the
CRM vendor invested into the CRM project helped establish the mutual trust between
the two companies and helped overcome the crisis in the project. This positively
influenced the project outcome in the end. The CRM project manager of DE Company
talked about this issue in the interview:
The end-users of these two functionalities even asked the senior management
to terminate the contract with the vendor and chose a new vendor. The board
chairperson of our vendor chaired a special meeting with our senior
management Quickly the problems were solved and the functionalities were
running pretty well two months later. This made us start to trust our vendor
(CRM project manager of DE Company)
The DE interviewees also perceived that an IT outsourcing project normally involved
conflicting interests between two parties. But in the CRM case, the two companies had
foreseen the opportunity to pursue mutual interests in the long run (i.e. DE Company
hoped to improve other management packages with the help of the CRM vendor in the
future, whereas the vendor expected to understand the business of the mechanism
industry and develop more potential customers in the related industry), and hence they
could overlook some short-term conflicts. That could explain why DE appeared to be
patient enough in the crisis and the trust was easy to establish in the CRM project. The
representative quote is from the CIO of DE Company:
Normally, when two parties failed to run the project well, the most likely
reason was that the project involved conflicting interests of these two parties. If
the two parties were able to find mutual interests in a long run and aimed to
119
DE Company and the CRM vendor regarded the contract as a starting point for building
their business relationship. Contract was also perceived as a legal support for the
relationship development in the CRM project. The vendor prepared two different
contracts in different stages of the CRM project, but the two contracts both turned out to
be useless in the actual project management. The CRM vendor spent more time in
establishing and maintaining the relationship with DE Company in the CRM project.
For example, a CRM project team member of DE Company stated his opinion:
In my opinion, a contract was a starting point for both parties to establish a
business relationshipIf the relationship failed, the contract was a legal
support to appeal reasonable compensation. If relationship was expected to
start or amend, contract could also be used as a method to express ones
faithfulness (CRM project team member of DE Company)
DE Company organised face-to-face communication with the system developers in the
headquarters of the CRM vendor in another city. The CRM vendor specifically assigned
an employee to coordinate the unexpected communication with DE Company in the
CRM project. The project team members from two companies discussed the project
issues in a formal and explicit manner in the early days of the project, but they gradually
became more relaxed later on. This could be supported by the statement of CRM project
team member of DE Company in the interview:
In the early days, we talked with each other formally. If no business
communication was needed, we just kept silence. But at the later stages, when
the two companies got closer and closer, people from the two companies were
120
122
4.6
This section summarises the three selected cases and concludes the initial impressions
of single cases. The descriptive information about the three cases is summarised in
Table 4.2.
123
HR case
CRM case
Project duration
3 million
(0.35 million US$)
0.4 million
(0.05 million US$)
0.6 million
(0.07 million US$)
Main functional
departments
involved
Design Dept.,
Manufacturing Dept.,
Product Engineering
Dept., IT Dept.
HR Dept.,
IT Dept.
Sales branches,
Marketing Dept.,
IT Dept.
Personnel
administration,
management advisory
Required
functionality
Consolidation of the
document
management system,
engineering bill of
materials (EBOM)
system, and
production schedule
system;
Establishment of a
shared product
database for
consistent data
retrieval
Branches inventory
management,
post-sales,
direct sales,
customer
management,
customer e-training
Vendor name
PT Company
SQ Company
NG Company
Cultural
background of the
vendor
Western (US)
Chinese
Chinese
Contract type
Comprehensive
Brief
Brief
Transactional only
Partnership
On the way to
partnership
Relationship type
Outcome of
contract
implementation
Successful
Successful
(Completed within the (Completed beyond
contract scope)
the contract scope)
Failed
(Lost
control of the contract
schedule)
Level of user
satisfaction
Dissatisfaction
Satisfaction
Moderate satisfaction
Operational
Some functionalities
operational
Extent of system
adoption
4.7
Chapter summary
The role of this chapter is to get familiar with the data collected from the three cases
before interpreting the meaning behind the data. The chapter began with the description
124
of the approach to presentation of the data analysis. The approach will be used
consistently in within-case analysis of this chapter as well as in cross-case analysis of
Chapter 5. This was followed by depicting the organisation background of DE
Company, including its business development history and its IS development history.
Then, the three selected cases the PDM project, the HR project, and the CRM project
were explored respectively. The exploration includes the project description and the
within-case analysis presenting the findings regarding three research questions. Lastly,
the three IT outsourcing cases were summarised in a table along several dimensions.
The next chapter will look beyond the initial impressions of single cases and resolve the
research problem by cross-case comparisons centring on three research questions. Also,
attempts will be made to generate theory through interpreting the data.
125
126
The third research question brings in the issue of cross-cultural differences. The three IT
outsourcing cases were divided into two groups for purposes of comparison and contrast.
One group consists of the PDM case which involved the cross-cultural collaboration
between a Western vendor and a Chinese customer. The other group consists of the HR
case and the CRM case which involved the collaboration between partners from the
same Chinese cultural background. The cross-case analysis on the third research issue
will compare within the groups and contrast across the groups. Data were mainly
collected from the customer side to examine the perceived cultural differences. Some
information was also obtained from the vendor side to validate the perceptions of the
customer organisation.
5.1
step) and whether the interviewees felt satisfied with the relationship category (which
was identified in the first step) in the three cases.
The three steps for presenting findings constitute the following subsections: relationship
category (section 5.1.1), characteristics of an IT outsourcing relationship (section 5.1.2)
and contribution of each characteristic towards establishing a satisfactory IT
outsourcing relationship (section 5.1.3).
128
Table 5.1: The dynamics of the relationship for three IT outsourcing cases
PDM case
HR case
CRM case
Initial expectation on
the relationship
Partnership
Partnership
Transaction only
Relationship status at
the beginning of the
project
Transaction only
Partnership
Transaction only
Relationship status at
the end of project
Transaction only
Strengthened partnership
Relationship status
after the project
No relationship
Trustworthy partnership
In the PDM case, the case organisation DE Company had a strong inclination to develop
a partnership-based relationship with its vendor, even though the two companies had no
prior experience in collaborating with each other. The relationship was transactional
when the contract was signed and did not develop into a partnership as DE staff
expected. After the project, the interviewees still regarded the relationship as a
transactional one.
As for the HR case, DE Company is one of the key owners of its vendor. The vendor
company was established for the purpose of providing specialised IT services to DE
Company and other companies having similar business processes. The two companies
already had a partnership type relationship before the HR project started. Through the
HR project, the interviewees perceived that their partnership was further strengthened.
As for the CRM case, DE staff did not have much expectation on the relationship
establishment at the beginning of the project. They treated the CRM project as an
ordinary commercial deal and regarded the IT outsourcing relationship as merely a
transactional type initially. However, after going through the ups and downs of the
project with its vendor, DE staff very much appreciated the efforts the vendor made on
the CRM project. As such, the description on the way to partnership was used by the
interviewees to describe the relationship status at the end of the project.
commonality of the descriptions across the three different cases with high consistency.
The primary recurring themes extracted via open coding of the interview transcripts are:
Contract implementation
Trust
Value proposition.
Contract implementation was highlighted by almost all the interviewees when they were
asked to describe the relationships with their vendors. This theme emerged in areas such
as the descriptions on whether the contract was fulfilled successfully.
Trust was cited by most interviewees as a necessary characteristic to explain a
relationship. Trust in this study not only means the perception of the vendors ability
and expertise, or the expectation of technically competent role performance, but also the
perceptions of the vendors intention to perform DE Companys objectives, which is
associated with integrity and responsibility.
Value proposition means the concrete results a customer gets from using the products or
services of its vendor or a vendor gets from doing business with its customer. In the
interviews with DE staff, value proposition concerned the acknowledgement of the
economic and management benefits the vendors delivered to DE Company through the
IT outsourcing engagement. This theme was seen as significant across the three cases.
Table 5.2 illustrates how these three themes evolved from the interview transcripts and
compares the three cases along the three themes. The representative quotes were
selected to support the identification of each theme.
131
Table 5.2: A comparison of the relationship characteristics for three IT outsourcing cases
PDM case
Contract
implementation
CRM case
Successful
(Completed within the contract scope)
Successful
(Completed beyond the contract scope)
Failed
(Did not complete what the contract specified)
HR case
132
Value
proposition
133
The interviewees concluded that, in the PDM case and the HR case, the contracts were
implemented successfully, while the vendor of the CRM project lost control of the
contract implementation. It is assumed that the DE staff perceived the contract
implementation as a significant characteristic of a relationship, which explains why this
theme frequently emerged when interviewees described the relationships with their
vendors.
Interviewees in DE Company perceived that trust had been established in the HR
project and the CRM project but not in the PDM project. The PDM vendors inclination
to adhere to the specified contract annoyed DE staff and led to mistrust by DE staff.
Trust was also perceived as a necessary characteristic to build an IT outsourcing
relationship by interviewees from DE Company.
DE staff acknowledged that the vendors in the HR project and the CRM project brought
high value. However, the value delivered by the vendor of the PDM project was
perceived to be limited. The interviewees mentioned that the PDM system had to be
abandoned subsequently as it had only operated successfully in one of the production
lines. This was much less than what DE staff had expected at the beginning of the PDM
project. This theme emerged surprisingly from the descriptions about a relationship
across the three different IT outsourcing cases. Hence, the value proposition was also
perceived to be an influential characteristic in a relationship.
The above three themes were prominently mentioned in the interview transcripts when
interviewees were asked to describe the relationships with their vendors. They were
addressed in all three cases, independent of the case context per se. Such independence
from the case context might improve the applicability of the identified characteristics in
an IT outsourcing relationship regardless of the success of the relationship or of the case
story. Other themes such as good communication, concession on price, and open and
flexible attitude emerged sporadically, and merely appeared in one case. Their
134
emergence relied on the project heterogeneity. Therefore, these themes were excluded
from the representative characteristics of an IT outsourcing relationship.
135
Table 5.3: A comparison of the performance of relationship characteristics with the perception of the IT outsourcing relationship
PDM case
HR case
CRM case
Contract
implementation
Successful
(Completed within the contract scope)
Successful
(Completed beyond the contract scope)
Failed
(Lost control of the contract schedule)
Trust
Value proposition
Perception of the IT
outsourcing
relationship
Unsatisfactory
Satisfactory
Partly satisfactory
Quotes
(supporting the
perception of the IT
outsourcing
relationship)
136
137
5.2
Research question two asks how does relationship management influence the outcome
of an IT outsourcing project?. This question examines how relationship management
led the way to ultimate project outcomes. It is noted that this question is concerned with
the central concept of project outcomes that might vary with perceived norms. Hence,
to answer the second research question, it is necessary to first illustrate what the DE
staff perceives to be the project outcome of an IT outsourcing engagement. Then, the
analysis of how relationship management influenced IT outsourcing outcomes is
presented.
User satisfaction
System adoption.
User satisfaction was a common theme that the interviewees came up with when they
were asked to describe each projects outcome. For all the three cases, interviewees
expressed their personal satisfaction or the companys satisfaction towards the IT
138
139
HR case
CRM case
User
satisfaction
Dissatisfaction
Satisfaction
Moderate satisfaction
System
adoption
Operational
As for user satisfaction, the HR project gained the highest appraisals by DE staff. All
the interviewees showed their satisfaction towards this project without any hesitation. In
comparison with the HR project, the PDM project seemed to be more problematic. Most
of the interviewees felt unsatisfied with the project or expressed their suspicion about
the project outcomes. The satisfaction level for the CRM project was in the middle
range. DEs management deemed the project outcome as moderately satisfactory.
Although some of the project targets had not been achieved in the CRM project, those
system users from the DE branches expressed their satisfaction towards the released
functionality of the CRM system.
Only the HR system was completely operational when the interviews were being
conducted. The CRM project lagged behind the original schedule, so only some
functionalities of the CRM system had been applied to the daily workplace use. The
PDM project had completed the development phase. However, during the
implementation phase the new system was operational on one product line and failed to
operate on the other product lines.
Other themes that the interviewees used to describe the project outcome varied with the
case heterogeneity. For instance, in the PDM project, one interviewee addressed the
theme of the return of the investment, as the investment on the PDM project turned
out to be a large sum. In the HR project, one interviewee talked about the projects
impact on user confidence in IS development within DE Company, given the fact that
the HR project was expected to alleviate the resistance to the introduction of the new IS
in DE Company. In the CRM project, two interviewees praised the vendors efforts
expended on the project because the project result would not have been achieved if their
vendor had not put great efforts into the project. Such dependence on the case context
might decrease the applicability of these themes. Therefore, these themes were excluded
from the representative perceptions of the outcome of an IT outsourcing project.
141
Contract
Communication
Mutual interests
Social/personal bonds
Project resources.
Table 5.5 illustrates how these themes evolved from the interview transcripts and
compares the three cases along these themes. The representative quotes were selected to
support the identification of each theme and the arguments about this theme.
142
Table 5.5: A comparison of emerging themes and arguments regarding the influence of the relationship management in three IT
outsourcing cases
Emerging
themes
Contract
PDM case
A comprehensive and well prepared contract might help
improve the possibility of implementing the contract
successfully. (Argument 1.1a)
HR case
If the vendor implemented the contract flexibly and
actively responded to the new addressed requirements
by the customer organisation, it might lead to higher
user satisfaction and system adoption. (Argument 1.2)
CRM case
Little time spent on the contract preparation
might influence whether the contract could be
implemented successfully. (Argument 1.3a)
If the vendor failed to implement the contract
successful but established a good relationship, it
might still turn out to be good project outcome.
(Argument 1.3b)
Selected quotes
Communications
143
Mutual interests
Social/personal
bonds
Not available.
Not available.
Not available.
144
Not available.
145
The management of the contract was frequently spoken of by the interviewees from all
the three cases. Through comparison of the emerging arguments in the three cases, two
possible explanations emerged to illustrate how contract management might influence
the project outcome in the IT outsourcing cases of DE Company. One explanation is
that contract preparation might influence the contract implementation (Refer to
Argument 1.1a and Argument 1.3a in Table 5.5). But there were no indications that
good contract preparation helped improve the quality of contract implementation. For
instance, in the HR case, contract preparation was insufficient and the contract was only
a brief framework. However, this did not influence the successful implementation of the
contract.
The second possible explanation is that contract implementation might influence the
project outcomes (i.e. user satisfaction and system adoption) (Refer to Argument 1.1b,
Argument 1.2 and Argument 1.3b in Table 5.5). It was perceived by DE staff that
complementing the contract by flexibly and actively responding to the new addressed
requirements might improve user satisfaction and system adoption. But complementing
the contract literally, regardless of the newly addressed requirements, might lower user
satisfaction and system adoption. Furthermore, the PDM case indicated that the impact
of contract implementation on the user satisfaction could be small as long as the vendor
had successfully delivered high value to the customer organisation.
Communication was seen as part of everyday work in relationship management in the
three IT outsourcing cases. Interviewees spent a great amount of time discussing this
issue. DE staff perceived that communication might influence trust (Refer to Argument
2.2a and Argument 2.3 in Table 5.5) and the value proposition (Refer to Argument 2.2b
in Table 5.5), and vice versa. DE staff also perceived that communication might have a
direct impact on project outcomes (i.e. user satisfaction and system adoption) (Refer to
Argument 2.1 in Table 5.5). Comparison of the three cases showed that effective
communication helped strengthen the relationship and improved project outcomes in
DE Company.
When the issue of relationship management influence was discussed during the
interview, the theme recognition of the mutual interests was mentioned in the two
cases (i.e. the HR case and the CRM case). It does not mean this theme did not exist in
146
the case of PDM. The following excerpt indicated that DE staff intended to establish
mutual interests through the PDM project but did not express it explicitly.
At that time, PDM was a new idea to us; we did not know clearly what kind of
requirements might not adapt to the potential changes We signed the contract
with the vendor with the hope to learn from themWhen both sides signed the
contract, we verbally mentioned to our vendor that a follow-up project [the
second stage of PDM system] would be expected if the first stage was successfully
completed. But no agreement was signed on this follow-up project. (The project
manager of PDM)
Not available in the column of PDM case in Table 5.5 means that the interviewees
from the PDM case did not discuss how the management of mutual interests influenced
the project outcome. Therefore, only the HR and the CRM cases provided evidence
about the influence of management of mutual interests. Two possible explanations were
described by the interviewees. One is from the mutual interests to the project resources
(Refer to Argument 3.2 in Table 5.5). It was perceived by DE staff that the more mutual
interests were established, the more resources vendors would invest into the project.
The other explanation is that mutual interests might influence trust, and then influence
project outcomes (Refer to Argument 3.3 in Table 5.5). DE staff held the view that the
mutual interests existing between the two parties could help increase mutual trust and
resolve conflicts easily, which would also affect project outcomes.
The development of social/personal bonds was noted by interviewees for the PDM case
and the HR case where they described how relationship management influenced project
outcomes. Not available does not mean that the management of social/personal bonds
was not cited by the interviewees, but meant that the interviewees did not link it to this
topic. Two possible explanations were described in the interviews. One is the mutual
influence of social/personal bonds and communication (Refer to Argument 4.1a and
Argument 4.2 in Table 5.5). DE staff perceived that tight social/personal bonds might
help facilitate effective communication and effective communication might help
establish or strengthen social/personal bonds. The other explanation is how
social/personal bonds might influence the trust and acknowledgment of the vendors
value, and influence the project outcome (Refer to Argument 4.1a, Argument 4.1b and
Argument 4.2 in Table 5.5). It was assumed that good social/personal bonds could
147
increase the trust between the two parties, while limited social/personal bonds might
restrict the vendor in delivering value to the customer organisation.
The management of project resources was a common issue mentioned by interviewees
from all three cases. The arguments generated from the three cases all mentioned the
same explanation; that is, project resources might influence trust and then project
outcomes (e.g., user satisfaction) (Refer to Argument 5.1, Argument 5.2 and Argument
5.3 in Table 5.5). DE interviewees said that sufficient project resources helped the two
project teams from the vendor and the customer to increase mutual trust. But
insufficient or inappropriate resources invested into the project might lead to a
misunderstanding and breach of the mutual trust, which was important to the ultimate
project outcomes.
Figure 5.2 synthesises all the explanations interviewees raised in the interview in order
to illustrate how relationship management influences project outcomes in DE Company.
The arrows indicate the direction of the influences. Note that the figure aimed to depict
the emerging arguments from the interviews and to facilitate good understanding of the
influences of the relationship management; it has no causal implication in a positivist
sense. More specifically, the arrows do not imply causal relationships; themes in the
small boxes were grouped in a big dashed box representing one big category but do not
mean a complete set of indicators to measure the category. For instance, cost efficiency
is another commonly regarded indicator in the existing literature to describe the project
outcomes but it was not mentioned by interviewees from DE in this study.
148
Relationship
management practice
Contract
Relationship
Dynamics
Contract
implementation
Communication
User
satisfaction
Trust
Mutual interests
Social/Personal
bonds
Project
outcomes
System
adoption
Value proposition
Project resources
5.3
149
Cultural differences were investigated from five perspectives (please refer to Appendix
A regarding interview questions). These five perspectives were identified in section 5.2
by summarising the emerging themes about the relationship management from the
interview transcripts. If culture really mattered in the management of IT outsourcing
relationships, it would influence the perceptions of the relationship management
practice. Hence, the five perspectives investigated in this section are: the perceived
attitude towards the contract (Subsection 5.3.1), the perceived modes of communication
(Subsection 5.3.2), perceptions of mutual interests (Subsection 5.3.3), perceptions of
social/personal bonds (Subsection 5.3.4), and perceptions of project resources
(Subsection 5.3.5).
150
Table 5.6: A comparison of perceived attitudes towards the contract in three cases
Emerging themes
Contract
characteristics
PDM case
HR case
CRM case
151
The perceived
role of contract
152
Attitude towards
the work outside
the contract
Contract characteristics
PDM case
Comprehensive and
complete, not flexible
HR case
CRM case
PDM case
HR case
The
perceived
role of
contract
Abiding by the
contract was the first
thing in
implementing the
project or developing
trust.
Relationship
development was more
important than contract
implementation in the
project.
CRM case
The contract was a starting point as
well as a legal support for the
relationship development in the
project. The relationship governed
the project activities more than the
contract did.
researchers discussions with the two Chinese vendors and another Western vendor of
DE Company. The quotes from vendors are provided:
It is apparent that relationship works better than contract or regulations in the
Chinese society... We could sign a contract anytime we need, as long as we have a
good relationship. In the HR case, it was the project members who made
everything possible. We perform beyond the contract in order to maintain the
relationship (The project member of HR vendor)
If we regard a company like DE Company as a valuable customer, we would
endeavour to build a long-term relationship In this case, it was forgivable to
miss the contract schedule since what the customer needed was to best benefit
from the project. It was more important to deliver real value to the customer. Our
company believed that we had better guaranteed the implementation of the newly
developed system, which might be beyond the customers specification. We made
sure that the system really works on the customers site and helped them improve
their daily operation with the new systemIn this way, end-users would be happy
because the new system relieved their workload, the IT staff would be happy
because their proposal for further IT projects would be approved much more
easily in the future, and the senior executives would be happy because the project
outcome was immediate and encouraging which meant that they had made a wise
decision on the IT investment Then, the rest of the project or more projects
would be easier to manage as trust has been established (The project manager
of CRM vendor)
We knew that building a relationship is pretty important in the business
environment of China. Hence, when we had the first opportunity to cooperate with
a new customer like DE Company, we tried our best to keep our promise in the
first instance. Since our promise has been stated in the contract, we would achieve
it by all meansThis is also what the supervisors in our company always tell us
to doIf we failed to keep our promise, how could our customer rely on us and
give us another opportunity?... (The project manager of another Western vendor
of DE Company)
155
The perceived role of contract led to the discussion about the attitude towards work
outside the contract scope.
Table 5.6c: A comparison of the attitudes towards the work outside the contract in
three cases
Emerging themes
Attitude towards
the work outside
the contract
PDM case
The vendor appeared to
be cautious, sensitive
and reluctant to accept
work scope changes
against the contract.
HR case
The vendor was open
and flexible regarding
any changes in project
scope against the
contract.
CRM case
The vendor took it as
common and normal that
the work scope changed
against the initial
contract.
that they might lose the control of the contract implementation. As explained by the
project manager of another Western vendor of DE Company:
We hoped customers like DE Company could define a clear work scope before
the start of the project. We could understand the work scope changes, but we do
not like these changes. When these changes occurred too often in the project, the
project became messy and difficult to manage (The project manager of
another Western vendor of DE Company)
Along with the information collected from the DE employees and compared in Table
5.6cthe Chinese vendors and DE Company stressed that it was quite normal for
changes to be made to the contract due to the fact that it was difficult to foresee
uncertainties in the project. These Chinese organisations thought that a good
relationship should be achieved through exchanging favours between two partners. In
other words, if the vendor were cooperative enough to complete extra work beyond the
contract, the customer company would be likely to return favours to the vendor in
response to their request for establishing a good relationship. The remarks of the vice
president of DE Company explained this when he talked about the PDM project:
The vendor was keen on sticking to the contract signed earlier and they could
not give us timely response when we needed it. However, our team agreed that the
vendor could be cautious and mean when negotiating a contract, but after that,
they should be flexible in responding to changes and new requirements. If the
vendor could establish a good relationship with us through this project, our
company would have been happy to continue a follow up project with them or
return some reasonable financial benefits to them (The vice president of DE
Company)
In summary, Western vendors tended to rely on the tangible agreement or contract to
govern the business activity explicitly; however, DE Company or its Chinese vendors
did not feel comfortable about this. The Chinese organisations were inclined to rely on
intangible relationships to govern the business activity implicitly.
157
158
PDM case
The manner of
communication
HR case
CRM case
PDM case
HR case
CRM case
Irregular meetings;
the vendor facilitated
communication
whenever required.
160
PDM case
HR case
CRM case
In a formal,
impersonal, or
business-like manner
In an informal,
personal, or friendlike manner
161
162
PDM case
HR case
CRM case
163
The realisation of
the mutual interests
Failed to realise.
Succeeded in realising.
164
PDM case
The communication
about mutual
interests
HR case
No need to
communicate, as the
mutual interests existed
obviously for two sides
CRM case
DE staff did not
understand the mutual
interests in early days
but gradually got to
know later on.
165
Table 5.8b: A comparison of the realisation of the mutual interests in three cases
Emerging themes
The realisation of the
mutual interests
PDM case
Failed to
realise.
HR case
Succeeded in
realising.
CRM case
Not smooth at first but succeeded in
realising later on.
166
In summary, the researcher did not find any indications of cultural differences based on
the information collected in this study.
167
PDM case
HR case
CRM case
168
169
PDM case
HR case
CRM case
Very few
and
limited
Some social/personal
bonds had been
established before the
project.
170
PDM case
The vendor did not
care much about the
social/personal
bonds, but DE staff
regarded them as
important.
HR case
CRM case
Both parties
regarded the
social/personal
bonds as important
and helpful in the
project.
Company)
Another important issue emerging from the interviews is the notion of Guanxi (the
definition of Guanxi is given on page 102, Chapter 4 Sub-section 4.3.2), mentioned in
relation to the PDM project and the CRM project. Chinese interviewees assumed that if
Guanxi was felt, trust between two parties could be strengthened. The quotes of two
interviewees explained:
We [DE staff] don't know any of the project team members from the vendor side
[the PDM vendor] before. We could collaborate with each other in a business
manner, but I find it difficult to expect mutual trust or understanding to happen
with a merely business relationship. In contrast, sincerity or trust easily appears
with my familiar friend or my Guanxi networkOur vendors staff should be
aware of the personal bonds (PDM project team member of DE Company)
But if the senior management established some personal bonds or Guanxi, the
partnership would have been much easier to achieve, I believe (CRM project
manager of DE Company)
In summary, the Chinese companies regarded social/personal bonds as more significant
in a working environment than their Western counterparts. As shown in some of the
cases, the Chinese interviewees perceived social/personal bonds as one of the key
factors to build a successful business relationship.
172
in the project. The emerging themes are presented in Table 5.10 with their supporting
quotes.
173
PDM case
HR case
CRM case
Satisfactory
174
Perceptions of
invested human
resources
(by DE staff)
Respect the
experienced IT
specialist and software
experts in this project
PDM case
Not sufficient
and less than
satisfactory
HR case
CRM case
Satisfactory
176
PDM case
HR case
Perceptions
of invested
human
resources
(by DE staff)
Doubt the
qualification of the
sales representative
who took the key role
in this project
Respect the
experienced IT
specialist and
software experts in
this project
CRM case
Prefer to collaborate directly with
the system developers; doubt the
qualification of the assistant of the
technical manager who had no
technical background
leaders in IT outsourcing projects. DE staff felt uncomfortable when the PDM vendor (a
Western company) assigned a sales representative to take a key role in the PDM project.
Interviewees from DE Company doubted the credentials of the sales representative in
the PDM project and also doubted the qualification of the technical managers assistant
in the requirement analysis phase in the CRM project simply because this assistant had
no technical background.
This finding was confirmed by the vendors. The project manager of the CRM vendor
did not confirm the suspicion from DE Company that they purposely used the title of
technical manager for someone who was, in fact, in a sales role. However, he
supported the arguments about the authority of technical experts in Chinese society:
It was quite normal that customers liked to address their problems with the
technical experts in our company. Customers and even employees in our own
company would believe in the technical experts and would like to rely on them to
make the decision. This is why the system developers in the headquarters had
many privileges even though they might be not high up in the hierarchy
structure... (The project manager of CRM vendor)
The project manager of another Western vendor of DE Company addressed a new
cultural difference concerning this issue according to his experiences in cooperating
with both Western customers and Chinese customers: Chinese companies were more
sensitive to hierarchical structure than Western companies. This was illustrated by the
project manager of this Western vendor:
For instance, in our project with DE Company, the project members from them
would like to address their system requirements to the project leader even though
we had assigned an analyst who was in charge of the role of requirements
collection and analysis. As far as we could understand, the top guy in the
hierarchy structure may not necessarily be the appropriate person to solve your
problem. If we assign the same project team to our Western customers, they are
able to recognise the functional structure and find a right person to resolve their
problems. Furthermore, they did not show special enthusiasms to the company
leaders as Chinese companies usually do (The project manager of another
Western vendor of DE Company)
178
In summary, technical experts and the top personnel in the hierarchy gained more
respect from Chinese companies than Western vendors. Chinese companies would feel
comfortable when technical experts or senior managers rather than sales people took a
key role in an IT outsourcing project.
5.4
Chapter summary
The role of this chapter was to present cross-case analysis and findings for the three
research questions. Information regarding each research question was subdivided into
issues or themes. These issues or themes were presented in tables to facilitate
comparison across the three IT outsourcing cases.
The three research questions were explored in turn: first, information was summarised
to address the question what are the distinguishing characteristics of an effective IT
outsourcing relationship?; then the second research question how does relationship
management influence the outcome of an IT outsourcing project? was focused on;
finally, the information was categorised according to the five issues which jointly
addressed the third research question to what extent do cross-cultural differences affect
relationship management in IT outsourcing?
This chapter made no attempt to compare these findings with the extant literature as that
is the role of the next chapter.
179
6. Conclusions
This chapter concludes the thesis. It starts with a summary of this study (Section 6.1).
Then it discusses the findings about the three research questions in the light of the
existing literature (Section 6.2), and these lead to the conclusions about the research
problem (Section 6.3). Next, the contribution of this research (Section 6.4) is described
from two perspectives: contribution to theory and implications for practice. Finally, the
limitations of this research are acknowledged (Section 6.5) and suggestions for future
research (Section 6.6) are recommended. Figure 6.1 shows the structure of Chapter 6.
180
6.1
partners and the Chinese partners. In contrast, no cultural differences were detected in
the perceptions of mutual interests. These findings are discussed in the context of the
existing literature in the following sections.
6.2
Discussion of findings
This section discusses findings, comparing the findings of this research with the existing
literature. The discussion consolidates a substantial volume of prior theory with the
research findings and integrates theoretical constructs with their application in this
research while preserving the research context.
This study found that IT outsourcing relationships are not static; they are changing and
evolving over time. Three IT outsourcing cases in this research had different
relationship development stories (refer to Chapter 4 from Section 4.3 to 4.5). This study
captured the dynamic nature of a relationship and extracted four aspects of a
relationship to describe the development of an IT outsourcing relationship in each
project. These four aspects are "initial expectation on the relationship, the relationship
status at the beginning of the project, the relationship status at the end of the project,
and the relationship status after the project (refer to Chapter 5 Section 5.1 and Table
5.2). The identification of these four aspects in this study is similar to the conclusion of
Nam et al. (1996) and Kishore et al. (2003), who emphasised that interorganisational
183
relationships should not simply identify the specific relationship category for each pair
of companies, but consider the prior relationship the customer organisation had with its
vendor and trace the movement of customer-vendor relationship over time.
The four aspects of a relationship not only capture the different phases of the
relationship development for three IT outsourcing cases, but also influence each other in
all the three cases. The findings of this study showed that the initial expectation of a
relationship and the relationship status at the beginning of the project could explain
whether the project participants of one party took an active or passive role in the
relationship management for this project. For instance, in the CRM case, DE Company
took a relatively passive role in relationship establishment and development, because
the initial expectation of a relationship and the relationship status at the beginning of the
project were the same as DE Company. Then, in all three cases the joint-efforts the two
parties made since the project started would influence the relationship status at the end
of the project and after the project. The gap between the initial expectation of a
relationship and the relationship status at the end of the project or after the project
would greatly influence the perception of one party on whether relationship
development was satisfactory or not.
This is consistent with prior research on evolution of interorganisational relationships in
other contexts (e.g., Doz, 1996; Ring and van de Ven, 1994; Sabherwal, 1999; 2003). In
this study the way in which inter-organisational relationships evolved was shaped by the
initial conditions and adjustment activities, which confirms the conclusions of Doz
(1996) and Sabherwal (2003). The customer-vendor relationship of the HR case moved
in a virtuous circle as defined by Sabherwal (1999) and resulted in a strengthened
partnership. Sabherwal (1999) found that positive trust and appropriate structuring are
essential for a good outcome of a project, which in turn improves trust and facilitates
more appropriate structuring. The successful outcome of the HR project can be
attributed to a large extent to the initial condition of a solid partnership relationship
between the two sides prior to embarking on IT outsourcing. The PDM case and the
184
CRM case started with the same relationship condition (i.e. the customer and vendor
had no prior collaborations), thereby relying on adjustment activities to promote their
relationships. However, the relationships emerged differently. In the PDM case the
relationship underwent a process described by Doz (1996) as stubborn with little
learning and readjustment; whereas the CRM case underwent the cycles of learning,
re-evaluation and readjustment (Sabherwal, 2003, p. 159).
However, the findings in this study are inconsistent with those of Sabherwal (2003) who
argues that the vendor, who is usually more experienced in outsourcing, prefers to go
into projects with greater preparation (as reflected in their greater emphasis on more
formal and impersonal mechanisms); in contrast, the customer, who usually has less
experience with such projects, seeks increased informal mutual adjustment. The HR
vendor and the CRM vendor in this study did not resist informal mutual adjustment and
did not pull the relationship towards the formal mechanisms characterised by standards,
plans, and formal mutual adjustment. In the manufacturing industry, business processes
are complicated and unique; for this reason vendors seldom try to persuade customers to
follow their IT outsourcing processes. In order to achieve success in the IT outsourcing
projects, the HR vendor and the CRM vendor actively made informal adjustments in
response to the customers requests.
z
The findings of this research showed that contract implementation, trust, and value
proposition are three distinguishing characteristics of an IT outsourcing relationship.
Contract implementation refers to whether the contract was fulfilled successfully. Trust
in this study not only means the perception on the vendors ability and expertise, or the
expectation of technically competent role performance, but also the perceptions of the
vendors intention to perform according to customers objectives, which is associated
with integrity and responsibility. Value proposition in this study refers to the
acknowledgement of economic and management benefits the vendors delivered to DE
Company through the IT outsourcing projects. These three characteristics were
185
prominently mentioned across cases when interviewees described the relationships with
their vendors, independent of the case context per se. Hence, they were identified in this
study as the distinguishing characteristics of an IT outsourcing relationship.
Contract implementation and trust are two common components identified, in existing
literature on IT outsourcing, as describing a relationship (e.g., Barthelemy, 2003;
Sabherwal, 1999; Willcocks and Kern, 1997). Barthelemy (2003) labels contract
implementation as the hard side of a relationship while trust as the soft side of a
relationship. This study suggests that contract implementation has a huge impact on
relationship quality because it allows two parties to set expectations and to commit
themselves to short- and medium-term goals (which is in line with the work of
Barthelemy (2003) and Gulati (1995)). This study also suggests that trust makes the
relationship more durable in the face of conflict and encourages interactions between
parties involving promotion of each others interests (which is line with the work of
Johanson and Mattsson (1987) and Sabherwal (1999)).
In addition, this study complements the existing literature by identifying a third
characteristic of a relationship: value proposition. The term value proposition was
borrowed from the work of Levina and Ross (2003) and refers to the concrete benefits a
customer gets from using the products or services of its vendor or the benefits a vendor
obtains from doing business with its customer. The study of Levina and Ross (2003)
explains how vendors deliver value to customers and manage the relationship cost
effectively. They addressed the importance of the value proposition in IT outsourcing
relationship management, but did not link this concept to the perceived relationship
characteristics in IT outsourcing. The findings of this study suggest that value
proposition is an additional perspective shaping the project participants perception on
an IT outsourcing relationship, besides contract implementation and trust. For instance,
in the CRM case the vendor lost control in contract implementation and did not
establish trust at the beginning of the project. However, when the customer organisation
(DE Company) became aware of the benefits the vendor delivered to its sales function
186
through the CRM project, the interviewees from DE Company started to perceive the
relationship as moderately satisfactory. Trust was also gradually established when the
customer organisation obtained increasing benefits from its vendor.
z
developing countries (Knack and Keefer, 1997). When a society has little regard for law
enforcement, trust appears to be a key complement in business collaborations.
6.2.2
Project outcomes
The findings of this research indicated that interviewees from DE Company perceived
user satisfaction and system adoption as two main measures of project outcomes.
User satisfaction is a subjective indicator concerning overall impressions of users on an
IT outsourcing project. It can be viewed as the level of fitness between the users
expectations (on economic benefits and strategic benefits) and the project consequences.
System adoption is an objective indicator regarding the level of acceptance and usage of
the new system in the everyday workplace of the customer organisation. It can be
viewed as the technical benefits the IT outsourcing projects eventually bring.
A lot of studies in existing IS literature have discussed the perceived measures of
project outcomes of IT outsourcing (e.g., Grover et al., 1996; Lacity and Willcocks,
1998, 2000; Lee and Kim, 1999; Saunders et al., 1997; Venkatraman and Ramanujam,
1987). Some of these studies include other indicators in addition to user satisfaction
and system adoption identified in this research. For example, Lacity and Willcocks
(1998; 2000) use expected cost savings achieved as one of the indicators of project
189
outcomes. The findings of this research showed that this indicator is not appropriate in
todays IT outsourcing arrangements motivated by strategic intent rather than cost
considerations. Lee and Kim (1999) use realisation of the business benefits (business
perspective) in addition to user satisfaction (user perspective) as their indicators of
project outcomes. But the themes extracted from this study only reflect the perceptions
of the DE interviewees on project outcomes and do not represent a complete set of
measurements of the concept project outcomes.
z
As for the impact of relationship management, this research found that five perspectives
of relationship management practice would affect the performances of relationship
characteristics. Then the changes of relationship status would in turn affect the
relationship management practices and influence the outcome of an IT outsourcing
project. Some management practices might directly affect the eventual project outcomes.
This research also synthesises all the possible paths to illustrate the relationship
management impact (refer to Figure 5.2). For example, in the HR project the prior
relationship (i.e. DE Company is the parent company of the HR vendor) between these
two companies led to mutual recognition of common interests in the HR project. This
helped to explain why the HR vendor generously invested its resources into the HR
project. This was also perceived to strengthen their mutual trust and increased the
satisfaction of end-users in DE Company. Another example comes from the PDM case.
The ineffective communication between DE Company and PDM vendor was regarded
as the main explanation for different understandings of system requirement and
different expectation on the project objective, which was perceived to negatively
influence final system implementation and end-users satisfaction.
These findings about relationship management impact are in line with the work of
Willcocks and Kern (1998) and that of Lee and Kim (1999). However, the explanation
of these possible influences followed the interpretive approach in this study as
190
Willcocks and Kern (1998) did, and has no causal implications in a positivist sense like
that of Lee and Kim (1999).
Both Chinese and Western vendors in the cases aimed at establishing a long-term
relationship. The problem is that they hold different perceptions on how to foster this
long-term relationship. This research showed that the Western vendor tended to rely on
the tangible agreement or contract to govern business activities explicitly and to the
letter. They worked with a comprehensive and complete contract. The vendor appeared
to be cautious and reluctant to accept changes of scope or other conditions specified in
the contract. Abiding by the contract and assuring on-time delivery, they believed, was
the most important contributor to establishing trust in an IT outsourcing project. In
contrast, contracts between the Chinese customer (DE Company) and two Chinese
vendors were usually brief and flexible. They regarded the contract as a starting point or
a legal support for the relationship development in the project. They were clear that it
was the relationship that governed the business activities in the project. Hence, they
were open and flexible regarding any changes in project scope.
These findings support Schwartzs (1994) model, which categorised Chinese society
into the relationship culture and Western society into contractual cultures. The different
attitudes towards the contract found in this study are consistent with existing crosscultural literature (e.g., Chen and Partington, 2004; Lee, 1996; Tse et al., 1988; Wong
and Chan, 1999). Although it may be a great generalisation, Tse et al. (1988) claim that
191
Western culture is based on principles of explicit norms in rules and fair contractual
relationships while Chinese culture emphasises an intricate system of long-term moral
obligations, of repayment, without explicit rules for termination of the obligations. This
may explain the Western vendors tendency to stick to the contract with DE Company
and regard the relationship subordinate to the project task; in contrast, Chinese
managers put more emphasis on a long-term relationship with the DE Company and
perceived that project tasks would only be accomplished if close relationships within
the project team were achieved (Chen and Partington, 2004; Lee, 1996; Wong and Chan,
1999).
z
This study does not uncover any indications of cross-cultural differences in either the
communication of mutual interests or realisation of mutual interests. The findings of
this study do not mean that there are definitely no such cross-cultural differences
between Western vendors and their Chinese counterparts; rather, the researcher is not
able to draw conclusions about differences regarding mutual interests based on the
information collected for this research.
z
This research showed that the Chinese vendors and the Chinese customer regarded
social/personal bonds as more important in a business setting when collaborating with
each other than the Western vendor did. Guanxi in Chinese is the networks of
relationships among various people or parties that exchange favours, which are expected
to be done regularly and voluntarily. When Guanxi is felt, trust between two parties
could be easily established or strengthened. While for the interviewee from another
Western vendor, social/personal bonds among two parties were perceived to be helpful
in developing business partnership, they could not replace a formal business
relationship to establish or strengthen trust.
These findings reinforce the argument made by Pheng and Leong (2000) that
social/personal bonds are very important in Asian cultures where there is a tendency to
first develop social/personal bonds with business partners before getting down to the
specifics of negotiation. This study also confirms the findings of Chen and Partington
(2004) that Chinese project managers pay greater attention to building and maintaining
social/personal bonds within the project team, compared to working on the project task.
193
As indicated in existing literature, social/personal bonds are less valued in the US when
doing business (Pheng and Leong, 2000).
A note regarding the notion of Guanxi is required here. In existing Western literature,
the Chinese term Guanxi often refers to special interpersonal connections with the
characteristic of continuously exchanging favours (Pye, 1982). Business Guanxi can be
further divided into two types according to the type of parties involved (Fan, 2002). If
both parties in the relationship are business persons, it is B2B Guanxi; if one party is a
business person and the other a government official, it is B2G Guanxi (Fan, 2002). The
majority of existing literature discusses Guanxi in the sense of B2G Guanxi, which is
regarded as one of the most important key success factors or source of competitive
advantage in doing business in China (e.g., Ambramson and Ai, 1999; Fork and Woo,
1998; Yeung and Tung, 1996). In this research context, Guanxi involved B2B Guanxi
with no implication of corruption or questionable ethics. B2B Guanxi manifests the
preference of Chinese people to work with people they know or with those introduced
by other people they trust. It also implies a tendency of Chinese people to rely on longterm social networks in business settings. In contrast, Western companies encourage a
cost-benefit approach to decision making (Tse et al., 1988). Developing or maintaining
long-term relationships will cost time, energy and money (Fan, 2002), which Western
companies view as social costs and constraints. These findings provide a possible
explanation on Hofstedes (1991) generic argument that China is distinct from Western
countries with its long-term orientation (i.e. long-term reward could be expected as a
result of todays great investment) whereas Western countries are short-term oriented
(i.e. striving for immediate recognition).
z
Technical experts, including system developers, and project managers, tended to follow
the instructions of this sales representative. In contrast, in the mind of Chinese vendors
and the Chinese customer (DE Company), the authority of technical experts is higher
compared to sales or marketing people. IT and other technical experts who can solve the
problem with their technical talent or the top personnel in the hierarchy had more
respect in Chinese companies. They felt comfortable when technical experts or senior
managers rather than sales people took a key role in an IT outsourcing project.
There are some studies in the existing literature which argue that the structures of
Chinese companies are usually deeper and more hierarchical compared to Western
companies that tend to have a much flatter hierarchy (e.g., Hofstede, 1980, 1991; Chen
and Partington, 2002). While Western organisational structures like the matrix structure
utilise the functional and divisional chains of command simultaneously in a project, in
Chinese culture the more consensus-based structure is preferred (Rowlinson, 2001).
These studies help explain the findings of this study as to why top personnel in the
hierarchy could gain more respect from Chinese companies. The PDM case where the
Western vendor assigned a sales representative in a relationship management role
together with the system developers during the project provided an example of how the
matrix structure took effect in a Western culture based team. As a result, the managers
from DE Company felt degraded when they had to deal with a sales representative in
such an important project.
However, the finding that less respect was shown in a Chinese company to a sales
representative as a project team leader than to a technical expert as a project team leader
is not found in the existing literature.
6.3
The overarching research problem this research sought to investigate is: how can an IT
outsourcing relationship be managed to enhance the outcome of an IT outsourcing
project in a cross-cultural context?
195
In order to address the research problem, three research questions were developed as
instruments to collect empirical data. In-depth analysis of the three IT outsourcing cases
has provided a deep understanding of how IT outsourcing relationships were managed
especially in a cross-cultural context in the case organisation (DE Company). The
research findings (obtained from empirical data analysis) together with the synthesis of
ideas from existing literature in the form of constructs and conceptualisations of these
constructs enable some theory building: a relationship management framework based on
the case studies in the Chinese company (DE Company). The proposed relationship
management framework is shown in Figure 6.2a.
affects
affects
Relationship
management practice
Dynamics of the
relationship
reflected
in
Project
outcome
influences
Cross-cultural differences
management practices directly affect the project outcome rather than affect it through
the dynamics of the relationship.
This research also specifically explores the perspectives of relationship management
practices, the distinguishing characteristics of a relationship, and the perceived measures
of project outcomes. Figure 6.2b presents the extended relationship management
framework with these details included.
affects
Relationship
management practice
Dynamics of the
relationship
affects
Project
outcome
Contract
Communication
y Contract
reflected
y
implementation in
Mutual interests
y Trust
y Social/Personal
bonds
y Project resources
y Value
proposition
User
satisfaction
y System
adoption
influence
Cross-cultural differences
Figure 6.2b: Relationship management framework (detailed diagram)
(Source: Developed for this research)
This extended framework identifies five perspectives of the relationship management
practices in IT outsourcing: managing the IT outsourcing contract, managing
communication between two companies, seeking mutual interests, establishing
social/personal bonds, and managing project resources. The management of these
perspectives could impact the performance of three distinguishing relationship
characteristics: contract implementation, trust and the value proposition (i.e. the
concrete benefits a customer gets from using the products or services of its vendor or a
197
vendor gets from doing business with its customer). Then the dynamics of the
relationship are reflected in the projects outcome, evaluated by a subjective indicator,
user satisfaction, and an objective indicator, system adoption. The dynamics of the
relationship also influence the relationship management practices. In addition, some
perspectives of relationship management practice (e.g., communication) would also
influence other perspectives of relationship management practice and directly influence
the indicators of project outcomes. Examples of these influences were provided in
Figure 5.2.
If an IT outsourcing project involves partners of different cultural background, special
attention should be paid to cross-cultural differences which might influence the
relationship management practices and influence the dynamics of a relationship. The
parties involved in this study are from a Chinese cultural background (the outsourcing
company and two vendors) and a Western cultural background (one vendor). Insights
into cross-cultural differences in relationship management among Chinese companies
(two Chinese vendors and a Chinese customer) and among the Chinese company and
the Western vendor are summarised in Table 6.1.
198
Communication
Social/personal
bonds
Project
resources
Communicating in an
informal, personal and a
friend-like manner to show
closeness
Developing social/personal
bonds were perceived as
important in a business
relationship.
When Guanxi was felt, a
trust could be easily
established and
strengthened
Working with a
comprehensive and
complete contract
Relying on the tangible
agreement or contract to
govern the business
activities explicitly
Emphasis on the planned or
scheduled communications
Communicating in a formal
and explicit manner to show
professionalism
Developing social/personal
bonds was not a priority in
the business relationships
Formal business relationship
was developed regardless of
social/personal bonds.
199
6.4
three IT outsourcing projects. This process is described by Lee and Baskerville (2003)
as generalising from empirical statements to theoretical statements. From another
perspective, the framework development in this research synthesises ideas from existing
literature and integrates concepts from economic, marketing, organisational behaviour,
international business, and cross-culture disciplines, which generalise from concepts to
theory (Lee and Baskerville, 2003). In addition, the research findings were discussed in
the light of existing literature in the above sections. Prior theoretical propositions highly
relevant to this research topic were explained and assessed in the context of the
empirical findings of this research. This facilitates the third type of generalisability,
which is generalising from theory to empirical description (Lee and Baskerville, 2003).
The last type of generalisability identified by Lee and Baskerville (2003) concerns
generalising from data to descriptive statements. This study provided a description
about the background information of the case organisation and three IT outsourcing
cases. In order to make it possible for readers to assess the validity of these empirical
descriptions, archival document references and illustrative quotes from the interviews
were provided with these empirical descriptions (refer to Chapter 4). The interpretive
research highly values these four types of generalisability because these guidelines
illuminate how research using interpretive approaches could substantially contribute to
theory in a proper way.
The simple linkage of national cultural values to work-related actions or attitudes is
criticised by contemporary academics as forfeiting the rich content of culture and the
dynamic nature of culture (e.g., Myers and Tan, 2002; Spencer-Oatey, 2000; Walsham,
2002). This research used in-depth case studies to investigate detailed work patterns in
the cross-cultural context and to explore the project participants perceptions on these
work patterns. This kind of research has advantages in gaining rich insights on how
national cultural differences influence business behaviour, but is in short supply in
existing literature.
In summary, this study explores relationship management for IT outsourcing and the
relevance of studying IT outsourcing in a cross-cultural context. As such, the current
research contributes to both these areas of the literature.
201
6.5
6.5.2
Although the findings of this research are considered relevant and contribute to theory
of managing IT outsourcing relationships in a cross-cultural context, this study is based
on limited cases of IT outsourcing projects in one customer organisation from a single
industry. The cross-cultural context in this study refers to the collaboration between
organisations with Chinese cultural background and US cultural background. These
findings can not be generalised to other IT outsourcing projects, other industries and
other cultural contexts.
This research focuses specifically on IT outsourcing cases with applications
development services (the reasons this research focuses on the applications development
were provided in Sub-section 2.1.1 of Chapter 2.). The findings may not directly
translate into relationship management of other types of IT outsourcing projects, for
example outsourcing IT infrastructure, outsourcing the maintenance work of legacy
applications, or outsourcing the whole IT function.
204
The case organisation selected for this research is from the manufacturing industry (the
reasons the case organisation was selected from the manufacturing industry were
provided in Sub-section 3.3.2 of Chapter 3). The findings should not be considered to be
of automatic relevance to other industries, for example the financial service industry, the
retailing industry, or the education institute. It is not that the findings generated from the
manufacturing industry are specific and irrelevant to other organisations, but rather that
the research was not designed to investigate across industries.
The IT outsourcing cases in this research were between Chinese partners and Western
partners. Both of the Western vendors involved in this study are US companies.
Although US culture is identified as a typical Western culture by many culture
researchers (e.g., Hofstede, 1991; Schwartz, 1994; Trompenaars, 1993), the findings are
not automatically valid when generalising to other Western companies, for example
Australian companies or European companies. Furthermore, generalising the findings of
this research to other cross-cultural contexts (e.g., collaboration between other countries)
would be inappropriate.
6.6
This section suggests directions for future research. The direction of future research
flows from the findings of this research.
This study generated relationship management frameworks describing how the
relationship management practice influenced the dynamics of an IT outsourcing
relationship, and then influenced project outcomes. The emerging concepts (or
constructs) and the emerging relationships among these concepts (or constructs) could
be further enriched and tested in future studies. The following strategies could be
adopted to enrich or test these frameworks:
More cases within the case organisation, cases in different organisations and
cases in different industries could be added to provide valuable insights on
relationship management in IT outsourcing and to enhance generalisability of
the relationship management frameworks established in this study to other
observed cases.
This research also raised several questions about cross-cultural differences for future
research. For instance, further study could examine whether there are no cross-cultural
differences existing in the perceptions of mutual interests in the real world; whether
there are any other cross-cultural differences in the perceived attitudes towards the
contract, perceived modes of communication, perceptions of social/personal bonds, or
perceptions of project resources; and whether there are any cross-cultural differences
related to other facets of the relationship management practice. These questions could
be addressed through the following strategies:
Interviews from the vendors side, especially Western vendors of the selected
cases, could be added to examine the impact of cross-cultural differences on
relationship management.
More cross-cultural collaboration cases in the case organisation, more crosscultural collaboration cases in other organisations in the same industry, and
more cross-cultural collaboration cases in different organisations from different
industries could be included to examine the impact of cross-cultural differences
on the relationship management.
More IT outsourcing cases could be selected from Western countries rather than
China, especially when Western companies are increasingly outsourcing IT
projects to developing countries like India, Poland, and China.
6.7
Chapter summary
This chapter concludes the thesis. It started with the summary of the research project
and then compared the findings of this research with existing literature. Synthesising
ideas from existing literature, this research developed relationship management
frameworks on IT outsourcing and a cultural comparison table to address the research
problem. Then, the chapter discussed the contribution of this research from the two
perspectives: contribution to theory on IT outsourcing and implications to practitioners
who face a similar setting in IT outsourcing. Next, the limitations associated with the
research design and limitations associated with the generalisability of the research
findings were acknowledged. Last, this chapter suggested the direction of the future
research which flows from the findings of these three IT outsourcing cases.
207
References
Agrawal, N. M., Thite, M. (2003). Human resource issues, challenges, and strategies in
the Indian software industry. International Journal of Human resources
Development and Management, 3(3), 249-264.
Aiken, M., Hage, J. (1968). Organisational interdependence and intra-organisational
structure. American Sociological Review, 33(6), 912-930.
Alexander, M., Young, D. (1996). Strategic Outsourcing. Long Range Planning, 29,
116-119.
Alper, P., Saharia, A. N. (1995). Outsourcing Information System Functions: An
Organisation Economics Perspective. Journal of Organisational Computing, 5(3),
197-217.
Ambramson, N. R., Ai, J.X. (1999). Canadian companies doing business in China: key
success factors. Management International Review, 39, 17-27.
Anderson, J. C., Narus, J. (1990). A model of distributor firm and manufacturer firm
working partnerships. Journal of Marketing, 54(1), 42-58.
Ang, S., Beath, C. (1993). Hierarchical elements in software contracts. Journal of
Organisational Computing, 3(3), 329-361.
ANR_DE (1993). DE Annual Report (1993).
homepage, Accessing date: March 24, 2005.
60-
211
Collingwood, R.G. (1946). The Idea of History, Oxford, England: Oxford University
Press.
Collingwood, R.G. (1961 edition). The Idea of History, Oxford, England: Oxford
University Press.
Conner, K. R., Prahalad, C. K. (1996). A resource based theory of the firm: knowledge
versus opportunism. Organisation Science, 7(5), 477-501.
Corbett, M. (1996). Outsourcing as a Strategic Tool. Canadian Business Review, 23,
June, 14-16.
Creed, W., Miles, E. (1996). Trust in organisations: a conceptual framework linking
organisational forms, managerial philosophies, and the opportunity costs of controls.
In: Kramer, R., Tyler, T. (Eds), Trust in Organisations: frontiers of theory and
Research. Sage, Thousand Oaks, CA.
Cross, J. (1995). IT Outsourcing: British Petroleums Competitive Approach. Harvard
Business Review, May-June, 94-102.
Cunningham, M. T. (1980). International marketing and purchasing of industrial goods
features of a European research project. European Journal of Marketing, 14(5/6),
322-338.
Dahl, S. (2003). An Overview of Intercultural Research. Middlesex University Business
School, http://stephan.dahl.at/intercultural/about_culture.html, London. Accessing
date: October 5, 2004.
Darke, P., Shanks, G., Broadbent, M. (1998). Successfully completing case study
research: combining rigour, relevance and pragmatism. Information Systems Journal,
8(4), 273-289.
Das, T., Teng, B. (2001). Trust, control and risk in strategic alliances: an integrated
framework. Journal of Organisation Studies, 22(2), 251-283.
Deloof, L. A. (1997). Information Systems Outsourcing Decision: Making a Managerial
Approach. Hershey PA: IDEA Group Publishing.
DiamondCluster (2005). http://blogs.zdnet.com/ITFacts/index.php?cat=29, Accessing
date: November 7, 2005.
Dilthey, W. (1958). The construction of the historical world in the human sciences
(Collected writings: Volume 7), Stuttgart: Teubner.
Doig, S. J., Ritter, R. C., Speckhals, K., Woolson, D. (2001). Has Outsourcing Gone too
far? McKinsey Quarterly, 4, 24-37.
Doz, Y. L. (1996). The evolution of cooperation in strategic alliances: initial conditions
or learning processes. Strategic Management Journal, 17, 55-83.
212
DRA_DE (2004). Diagnosis report and some advice on DEs IS development. Provided
by MIS department of Fudan University. Collecting date: January 20, 2005.
DRA_DE (2005). Diagnosis report and some advice on DEs IS development
(Executive edition). Provided by MIS department of Fudan University. Collecting
date: January 20, 2005.
Dulmin, R., Mininno, V. (2003). Supplier selection using a multi-criteria decision aid
method. Journal of Purchasing and Supply Management, 9(4), 177-187.
Dwyer, F. R., Schurr, P. H., Oh, S. (1987). Developing buyer-supplier relationship.
Journal of Marketing, 51(2), 11-27.
Dyer, J., Cho, D., Chu, W. (1998). Strategic supplier segmentation: The next Best
Practice in supply chain management. California Management Review, 40(2), 5777.
Dyer, J., Singh, H. (1998). The relational view: Cooperative strategy and sources of
interorganisational competitive advantage. Academy of Management Review, 23(4),
660-679.
Earl, M. J. (1996). The Risk of Outsourcing IT. Sloan Management Review, Spring, 2632.
Easterby, M., Thorpe, R., Lowe, A. (1991). The Philosophy of Research Design.
Chapter 3 in Management Research an Introduction, Sage Publications, London.
Easton, G. (1992). Industrial networks: a review. In Industrial Networks: A New View of
Reality. (Axelson, B. & Eason, G. Eds). Routledge, London.
Eisenhardt, K. M. (1989). Building theories from case study research. Academy of
Management Review, 14(4), 532-550.
Elashmawi, F., Jaris, P.R. (1993). Multicultural management: new skills for global
success. Houston, TX, US: Gulf Publishing Company.
Emory, C. W., Cooper, D. W. (1990). Business research methods (3th ed). Homewood,
IL: Irwin.
Ender, K. L., Kathleen, A. M. (1994). From Outsourcing to Alliances: Strategies for
Sharing Leadership and Exploiting Resources at Metropolitan Universities.
Metropolitan Universities, 5(3), Winter, 51-60.
ERP_DE (2003). Operating environment for future ERP. Provided by IT department of
DE Company. Collecting date: January 29, 2005.
ERP_DE (2004). ERP feasibility analysis. Provided by IT department of DE Company.
Collecting date: January 29, 2005.
213
214
Harland, C., Knight, L., Lamming, R., Walker, H. (2005). Outsourcing: assessing the
risks and benefits for organisations, sectors and nations. International Journal of
Operations & Production Management, 25(9), 831-850.
Harris, S., Sutton, R. (1986). Functions of parting ceremonies in dying organisations.
Academy of Management Journal, 29, 5-30.
Hart, O., Moore, J. (1988). Incomplete contracts and renegotiation, Econometria, 56(4),
755-785.
Hayes, D.C., Hunton, J. E., Reck, J. J. (2000). Information Systems Outsourcing
Announcements: Investigating the Impact on the Market Value of Contract-Granting
Firms. Journal of Information Systems, 14(2), 109-125.
Hemel, G., Prahalad, C. K. (1996). Computing for the Future, Harvard Business School
Press Boston, MA.
Henderson, J. C. (1990). Plugging into Strategic Partnerships: The Critical IS
Connection. Sloan Management Review, 31(3), 7-18.
Hirschheim, R., Lacity, M. (2000). The Myths and Realities of Information Technology
Insourcing. Communication of the ACM, 43(2), Feb, 99-107.
Hofstede, G. H. (1980). Cultures consequences: international differences in workrelated values. Beverly Hills, CA: Sage.
Hofstede, G. H. (1991). Cultures and Organisations: Software of the Mind. London,
New York, McGraw-Hill.
Hoplin, H. P. (1993). Outsourcing/Rightsizing for the 1990s. Industrial Management
and Data Systems, 93(1), 18-24.
Hsu, C., Chiu, C., Hsu, P. (2004). Predicting Information Systems Outsourcing Success
Using a Hierarchical Design of Case-based Reasoning. Expert Systems with
Applications, 26, 435-441.
ISH_DE (2004). IS Development History. Provided by IT department of DE Company.
Collecting date: January 29, 2005.
ISP_DE (2002). IS Planning (2002). Provided by IT department of DE Company.
Collecting date: January 29, 2005.
ISP_DE (2003). IS Planning (2003). Provided by IT department of DE Company.
Collecting date: January 29, 2005.
ISP_DE (2004). IS Planning (2004-2006). Provided by IT department of DE Company.
Collecting date: January 29, 2005.
ISSP_DE (2002). IS Strategy Planning (2002). Provided by IT department of DE
Company. Collecting date: January 29, 2005.
216
219
221
Noe, R. (1999). Employee training and development. Burr Ridge, IL: Irwin/McCraw
Hill.
Nooteboom, B. (1996). Trust, opportunism and governance: a process and control
model. Organisation Studies, 17(6), 985-1010.
Odman, P. J., Kerdeman, D. (1997). Hermeneutics. In J. P. Keeves (Ed.), Educational
research, methodology, and measurement : an international handbook ( 2nd ed.).
N.Y: Pergamon, 185-192.
Oliver, C. (1990). Determinants of interorganisational relationships: integration and
future directions. The Academy of Management Review, 15(2), 241-265.
Orlikowski, W. J., Baroudi, J. (1991). Studying information technology in organisations:
research approaches and assumptions. Information Systems Research, 2(1), March,
1-28.
Outhwaite, W. (1975). Understanding Social Life, London, Allen and Unwin.
Palvia, P. C. (1995). A Dialectic View of Information Systems Outsourcing: Pros and
Cons. Information & Management, 29, 265-275.
Pant, D.P., Allinson, C.W., Hayes, J. (1996). Transferring the Western model of project
organisation to a bureaucratic culture: the case of Nepal. International Journal of
Project Management, 14 (1), 53-57.
Parasuraman, A., Berry, L. L., Zeithaml, V.A. (1991). Understanding customer
expectations of service. Sloan Management Review, 32, 39-48.
Pare, G., Elam, J. J. (1997). Using Case Study Research To Build Theories Of IT
Implementation. in Information Systems And Qualitative Research: Proceedings Of
The IFIP TC8 WG 8.2 Conference On Information Systems And Qualitative
Research, Philadelphia, Pennsylvania, 542-569.
Patton, M. Q. (1990). Qualitative evaluation and research methods (2nd ed.), Newbury
Park, CA: Sage.
Perry, C., Alizadeh, Y., Riege, A. (1997). Qualitative methods in entrepreneurship
research. In Proceedings of the small enterprise association of Australia and New
Zealand (Annual Conference), Novatel Opal Cove Resort, Coffs Harbour, Australia,
21-4, September, 547-567.
Perry, C., Coote, L. (1994). Process of a Case Study Research Methodology: Tool for
Management Development, In proceedings of Australian and New Zealand
Association for Management ANZAM Conference, December, Victoria University of
Wellington, New Zealand.
Perry, C., Riege, A., Brown, L. (1999). Realisms role among scientific paradigms in
marketing research. Irish Marketing Review, 12 (2), 16-23.
222
225
226
Wicks, A., Berman, S., Jones, T. (1999). The structure of optimal trust: moral and
strategic implications. Academy of Management Review, 24(1), 99-116.
Widger, I. J. (1996). Rightsourcing Is Replacing Outsourcing. Telecommunications,
30(6), June, 99.
Willcocks, L. P., Choi, C. J. (1995). Cooperative Partnership and Total IT outsourcing:
From Contractual Obligation to Strategic Alliance. European Management Journal,
13(1), 67-78.
Willcocks, L. P., Kern, T. (1997). IT Outsourcing as Strategic Partnering: The Case of
the UK Inland Revenue. In proceedings of the Fifth European Conference on
Information Systems (ECIS97), Held at Cork, Ireland, June 19-21, 1470-1489.
Willcocks, L. P., Kern, T. (1998). IT Outsourcing as Strategic Partnering: The Case of
the UK Inland Revenue. European Journal of Information Systems, 7, 29-45.
Willcocks, L. P., Lacity, M. C., Currie, W. L. (1998). Exploring risk mitigation in I.T.
outsourcing: Recent case research. OXIIM Working paper RDP98/1. Oxford:
Oxford Institute of Information Management.
Willcocks, L. P., Lacity, M. C., Fitzgerald, G. (1995). Information Technology
Outsourcing in Europe and the USA: Assessment Issues. International Journal of
Information Management, 15(5), 333-351.
Williamson, O. E. (1983). Credible commitments: using hostages to support exchange.
American Economic Review, 73, 519-540.
Williamson, O. E. (1994). Transaction cost economics and organisation theory. N. J.
Smelser, R. Swedberg, eds. The handbook of Economic Sociology. Princeton
University Press, Princeton, NJ.
Wong, Y. H., Chan, R.Y. (1999). Relationship marketing in China: guanxi, favouritism
and adaptation. Journal of Business Ethics, 22(2), 107-118.
Yeung, I. Y. M., Tung, R. L. (1996). Achieving business success in Confucian societies:
the importance of Guanxi. Organisational Dynamics, 25(2), 54-65.
Yin, R. K. (1994). Case Study Research, Design and Methods (2nd ed.), Newbury Park,
Sage Publications.
ZDNet (2005). http://news.zdnet.com/2100-3513_22-5844018.html?tag=zdfd.newsfeed,
Accessing date: November 7, 2005.
228
229
DE
1)
2) ()
3) ()
4) :
5)
1)
2)
3)
4)
5)
230
6) ?
7) ? ?
?
8) ?
9)
10)
11) ?
12)
13)
?
14) ?
weiw@student.unsw.edu.au
231
DE
1)
2) ()
3) ()
4) :
5)
1)
2)
3)
4)
5) ?
6) ? ?
232
?
7) ?
8)
9)
1:
10)
?
11) ?
12)
2:
13) ?
//
14)
15)
3:
16)
17) XXXX (XXXX 14
233
--- 14
18) ?
19)
20) ?
weiw@student.unsw.edu.au
234
1)
2) ()
3) ()
4) :
5)
1)
2)
3)
4)
5)
6) ?
235
7)
8)
:
9)
10)
11)
12)
13) ?
14) ?
15)
16) ?
17) ?
weiw@student.unsw.edu.au
236
Opening section
1)
2)
3)
Describing the project (emphasize the business value of this study and the
contribution this interview may bring to the study)
4)
Ethical concerns: All data collected in this interview will be kept confidential and
anonymous. Your name and any companys name will be disguised, along with
any other identifying details, in the final research report. You could terminate the
interview at any time that you wish.
5)
Interviewee details
1)
2)
3)
237
Organisation information
4)
5)
When was it established? Which industry it operates in? What is its annual
turnover? History of organisation business growth? --- for General Manager
History of information system development? --- for IS Manager
7)
8)
Who is the vendor and some background information of the vendor especially the
cultural background?
9)
Has the contract changed much? Start of deal? Length of deal? Size of deal?
Number of people assigned and involved? What was the structure of your project
team and the vendors project team? What functionalities were outsourced? How
important do you think this functionality is to the company strategy? What is the
progress of this IT outsourcing project?
Closing section
11) Is there anything you would like to complement or you think I should know?
12) Could you provide any archival document in relation to what we talked about?
13) Could you introduce the relevant employees who could provide me with more
details of these IT outsourcing projects and could be interviewed by me these days?
14) May I contact you again if I later need to clarify any points that you have made?
238
Ending words
Many thanks for your involvement today. It is very much appreciated and I look
forward to a research output that will assist you and your company to better acquire
management skills to attain IT outsourcing success.
You may contact me on weiw@student.unsw.edu.au about any aspect of this research at
any time.
239
Opening section
1)
2)
3)
Describing the project (emphasize the business value of this study and the
contribution this interview may bring to the study)
4)
Ethical concerns: All data collected in this interview will be kept confidential and
anonymous. Your name and any companys name will be disguised, along with
any other identifying details, in the final research report. You could terminate the
interview at any time that you wish.
5)
Interviewee details
1)
Which IT outsourcing project did you participate? What was your role in the
participated case?
2)
3)
4)
240
May I know something about the IT outsourcing arrangement you took in charge
of?
6)
7)
Who is the vendor and some background information of the vendor especially the
cultural background?
8)
Has the contract changed much? Start of deal? Length of deal? Size of deal?
Number of people assigned and involved? What was the structure of your project
team and the vendors project team? What functionalities were outsourced? How
important do you think this functionality is to the company strategy? What is the
progress of this IT outsourcing project?
9)
RQ 1: Characteristics of relationship
10) How would you describe your relationship with your vendor in this project?
(Transactional/ Partnership/ Alliance?) Had the relationship changed in the project?
11) Why do you identify the relationship with your vendor in this way? (Ask the
interviewee to explain the relationship with its vendor)
12) Are you satisfied with the relationship established with your vendor?
pay special attention to the management practices interviewees mentioned and try
to record these practices on the notebook, because they will be used as key terms
of the questions about cross-cultural differences.)
15) In which way did these relationship management practices impact the outcome of
the IT outsourcing project? Would you please give me some episodes (or
examples) of how relationship management practice impact project outcomes?
RQ 3: Cross-cultural difference
16) Did you think your team and your vendor cooperate very well or not? Did the
working relationship go smoothly?
17) How did your team perceive XXXX? (XXXX refers to the relationship
management practice this interviewee mentioned in question 14.) What was your
vendors response to XXXX? Would you please give me some episodes (or
examples)?
--- This question is used iteratively until all the relationship management practices this
interviewee addressed in question 14 have been covered.
Closing section
18) Is there anything you would like to complement or you think I should know?
19) Could you provide any archival document in relation to what we talked about just
now?
20) May I please contact you again if I later need to clarify any points that you have
made?
Ending words
242
Many thanks for your involvement today. It is very much appreciated and I look
forward to a research output that will assist you and your company to better acquire
management skills to attain IT outsourcing success.
You may contact me on weiw@student.unsw.edu.au about any aspect of this research at
any time.
243
Opening section
1)
2)
3)
Describing the project (emphasize the business value of this study and the
contribution this interview may bring to the study)
4)
Ethical concerns: All data collected in this interview will be kept confidential and
anonymous. Your name and any companys name will be disguised, along with
any other identifying details, in the final research report. You could terminate the
interview at any time that you wish.
5)
Interviewee details
1)
Which project did you participate? What was your role in the participated project?
2)
3)
4)
244
6)
May I know something about the IT outsourcing arrangement you took in charge
of?
7)
When did your company bid for this project? When did you know your company
had got the project? What was your companys motivation when you decided to
bid for this project? When did this project start? How long did this project take?
How many people were assigned? What was the structure of your project team?
8)
Did you think your team and your vendor cooperate very well or not? Did the
working relationship go smoothly?
10) How did your project team perceive contract? How did your project team perceive
relationship with your customer organisation? What was your project teams
perceived role of contract/relationship in the project? What was the attitude of
your project team towards the work outside the contract requested by your
customer organisation?
11) How did your project team perceive the modes of communication? When and
where did your project team communicate with your customer organisation? What
was the manner of the communication?
12) How did your project team manage the mutual interests with your customer
organisation? Would your project team like to make mutual interests explicit when
cooperating with your customer organisation? Had these mutual interests been
realised through this project?
13) How did your project team perceive establishing social/personal bonds with your
customer? Were there any existing social/personal bonds with your customer prior
to this project?
245
14) How did your project team perceive the project resources invested by both parties,
especially the human resources investment?
15) Would you please give me some episodes (or examples) of the five above issues?
Closing section
16) Is there anything you would like to complement or you think I should know?
17) May I please contact you again if I later need to clarify any points that you have
made?
Ending words
Many thanks for your involvement today. It is very much appreciated.
You may contact me on weiw@student.unsw.edu.au about any aspect of this research at
any time.
246
Company2
Role in the
participated
case
Current role
in current
company
Previous role
in current
company
Working
years in
current
company
VP
DE Company
Senior
executive
Vice president
N/A (assigned
by government)
8 years
CIO3
DE Company
Senior
executive &
CRM project
manager
Chief
Information
Officer
Director of IT
Department
12 years
COO
DE Company
PDM Project
manager
Chief
Operation
Officer
Director of
Product
Department
18 years
PM3
DE Company
HR & CRM
project
manager
Director of IT
Department
IT manager in
IT Department
6 years
PMBA
DE Company
PDM project
team member
Associate
director of IT
Department
IT manager in
IT Department
5 years
PMBB
DE Company
HR project
team member
HR manager
in HR
Department
HR staff in HR
Department
7 years
PMBC
DE Company
CRM project
team member
Marketing
executive
Marketing
assistant
5 years
V1
SQ Company
(HR vendor)
HR project
team member
Technical
manager
System
developer
6 years
V2
NG Company
(CRM vendor)
CRM project
manager
Head of
Shanghai
office
System
consultant
9 years
V3
Consulting
Company M
(another
western
vendor)
Project
manager of
another
strategy
consulting
project
Manager in
the service
line of
manufacturing
industry
N/A (transferred
from another
company)
5 years
The names of interviewees are all disguised names due to the request for confidentiality from the interviewees.
The names of companies are all disguised names due to the request for confidentiality from the case organisation.
3
It means this interviewee have been interviewed twice at different time for this study.
2
247
Interviewee
Venue
Interview
method
Primary
information offered
January,
2005
VP (Vice president of DE
Company)
Meeting room of
DE Company
Face to
face
Organisational
background;
PDM case; HR case;
CRM case
January,
2005
Meeting room of
DE Company
Face to
face
IS development
history;
PDM case; HR case;
CRM case
January,
2005
Meeting room of
DE Company
Face to
face
PDM case
January,
2005
Office of IT Dept.
of DE Company
Face to
face
PDM case
January,
2005
Office of IT Dept.
of DE Company
Face to
face
HR case
January,
2005
Office of HR
Dept. of DE
Company
Face to
face
HR case
August,
2005
N/A
Telephone
interview
CRM case
August,
2005
N/A
Telephone
interview
CRM case
August,
2005
N/A
Telephone
interview
CRM case
February,
2006
Office of IT Dept.
of the HR project
vendor
Face to
face
HR case
February,
2006
Face to
face
CRM case
February,
2006
V3 (Another western
vendors project manager for
the strategy consulting
project with DE Company)
Face to
face
Opinions on cultural
differences
It means this interviewee have been interviewed twice at different time for this study.
248
Context information
type
Author
Source
Drafting date
IS Planning
(2002)
IS development
history
DE
Company
Provided by IT
department of DE
Company
30/10/2002
IS Planning
(2003)
IS development
history
DE
Company
Provided by IT
department of DE
Company
03/11/2003
IS Planning
(2004-2006)
IS development
history
DE
Company
Provided by IT
department of DE
Company
10/2004
IS strategy
planning (2002)
IS strategy
development
DE
Company
Provided by IT
department of DE
Company
20/03/2002
Key business
processes
analysis
Key business
processes
DE
Company
Provided by IT
department of DE
Company
03/11/2003
IS development
history
DE
Company
Provided by IT
department of DE
Company
02/06/2004
Operating
environment for
future ERP
Existing IS
environment
DE
Company
Provided by IT
department of DE
Company
03/11/2003
ERP feasibility
analysis
Existing IS
environment
DE
Company
Provided by IT
department of DE
Company
10/2004
IS development
history
IS development
history
DE
Company
Provided by IT
department of DE
Company
17/11/2004
10
Consulting report
on DEs strategy
development
Strategy development
history;
Industry competition
structure
Consulting
Company
M
Provided by IT
department of DE
Company
12/12/2002
11
Diagnosis report
and some advice
on DEs IS
development
IS development
history;
Existing IS
environment
Fudan
University
Provided by MIS
department of Fudan
University
18/12/2004
12
Diagnosis report
and some advice
on DEs IS
development
(Executive
edition)
Existing IS
environment
Fudan
University
Provided by MIS
department of Fudan
University
13/01/2005
249
13
Story about DE
Company
Business background
DE
Company
Downloaded from DE
Companys homepage
24/3/2005
14
Recent news
about DE
Company
Industry competition
structure
DE
Company
Downloaded from DE
Companys homepage
24/3/2005
15
Story about PT
Company
Business background
of the vendor
(PT Company)
PT
Company
Downloaded from PT
Companys homepage
24/3/2005
16
Story about SQ
Company
Business background
of the vendor
(SQ Company)
SQ
Company
Downloaded from SQ
Companys homepage
24/3/2005
17
Story about NG
Company
Business background
of the vendor
(NG Company)
NG
Company
Downloaded from NG
Companys homepage
20/8/2005
18
DE Annual
Report (1993)
Business growth,;
ownership structure
DE
Company
Downloaded from DE
Companys homepage
31/12/1993
19
DE Annual
Report (1994)
Business growth;
ownership structure
DE
Company
Downloaded from DE
Companys homepage
31/12/1994
20
DE Annual
Report (1995)
Business growth;
ownership structure
DE
Company
Downloaded from DE
Companys homepage
31/12/1995
21
DE Annual
Report (1996)
Business growth;
ownership structure
DE
Company
Downloaded from DE
Companys homepage
31/12/1996
22
DE Annual
Report (1997)
Business growth;
ownership structure
DE
Company
Downloaded from DE
Companys homepage
31/12/1997
23
DE Annual
Report (1998)
Business growth;
ownership structure
DE
Company
Downloaded from DE
Companys homepage
31/12/1998
24
DE Annual
Report (1999)
Business growth;
ownership structure
DE
Company
Downloaded from DE
Companys homepage
31/12/1999
25
DE Annual
Report (2000)
Business growth;
ownership structure
DE
Company
Downloaded from DE
Companys homepage
31/12/2000
26
DE Annual
Report (2001)
Business growth;
ownership structure
DE
Company
Downloaded from DE
Companys homepage
31/12/2001
27
DE Annual
Report (2002)
Business growth;
ownership structure
DE
Company
Downloaded from DE
Companys homepage
31/12/2002
28
DE Annual
Report (2003)
Business growth;
ownership structure
DE
Company
Downloaded from DE
Companys homepage
31/12/2003
29
DE Annual
Report (2004)
Business growth;
ownership structure
DE
Company
Downloaded from DE
Companys homepage
31/12/2004
250
251
Category
Sub-category
Code/Theme
Description
All the relevant information about the interviewee
Interviewee information
Interviewee name
The name of the interviewee (in this thesis the real name has been
suppressed.)
The length of time the interviewee has worked for in the current
company
Company name
The company name of the case organisation (in this thesis the real
name has been suppressed.)
Foundation day
The day when the case organisation was founded (in this thesis the
approximate time was used instead so that the case organisation
can not be identified.)
Headquarters location
Cultural background
Listed time
The day when the case organisation was listed in the stock market (in
this thesis the approximate time was used instead so that the case
organisation can not be identified.)
Ownership structure
Number of employees
The current number of the employees in the case organisation (in this
thesis the approximate number was used instead so that the case
organisation can not be identified.)
252
Category
Sub-category
Code/Theme
Description
Turnover
The current turnover per year of the case organisation (in this thesis
the approximate number was used instead so that the case
organisation can not be identified.)
Core business
Competition position
Business strategy
Advantage
Disadvantage
Business development
IS development (3 phases)
External Environment
Internal Environment
IS project(s)
Case description
Project description
Project Name
253
Category
Sub-category
Code/Theme
Description
Project duration
Project motivation
Outsourcing motivation
The reasons why the case organisation chose outsourcing this project
Selection of vendor
Required functionality
Vendor description
The company name of the vendor (in this thesis the real name has
been suppressed.)
Headquarters location
Cultural background
Contract description
The sum of the contract price (in this thesis the approximate price
was used in response to the request for confidentiality by the case
organisation.)
Contract negotiation
254
Category
Sub-category
Code/Theme
Description
Project progress
Relationship description
The dynamics of the relationship
Initial expectation on the relationship The relationship type the case organisation expected to have with its
vendor before the project (transactional/partnership/alliance)
Relationship status at the beginning
of the project
The relationship type the case organisation had with its vendor at the
beginning of the project (transactional/partnership/alliance)
The relationship type the case organisation had with its vendor at the
end of the project (transactional/partnership/alliance)
The relationship type the case organisation had with its vendor after
the project (transactional/partnership/alliance)
Relationship characteristics
Contract implementation
Trust
Value proposition
255
Category
Sub-category
Code/Theme
Description
The impact of relationship management on project outcomes
The project outcomes the interviewees perceived in the IT
outsourcing projects
User satisfaction
The description on whether the system users felt satisfied with the
new developed system
System adoption
Cultural differences
Perceived attitudes towards the contract
Contract characteristics
256
Category
Sub-category
Code/Theme
Description
Manner of communication