Over recent years, many forms of inter-organisational collaboration have gained in popularity. IT outsourcing is a particular form of collaboration and, while cost savings and other benefits forecast in the early days of the outsourcing boom have not always eventuated, the approach has retained much of its popularity. It is becoming increasingly apparent, however, that we still have some way to go in understanding how outsourcing arrangements actually work in practice. In particular the many failed ventures indicate that managing these partnerships is no trivial matter. Here, we report on an IT outsourcing venture, where interface management’s failure to take into account the needs of one of its most successful Divisions destroyed a major source of that Division’s competitive advantage – its information systems support function. We describe how that Division developed and attempted to employ a system dynamics model to protect its operations and functions. We then use a further model based on the same paradigm to illustrate how power/ political considerations meant that its efforts were always likely to fail.
McGrath, Michael and More, Elizabeth, "Understanding Information Systems Outsourcing: why multiple perspectives are essential" (2002). ACIS 2002 Proceedings. Paper 95.