Action: the most critical phase in outsourcing information technology

Abstract

The paper examined the nature of information technology (IT) outsourcing decision making and developed a theoretical framework consisting of five phases of decision making. The phases augmented those of Simon and consisted of intelligence, analysis and planning, strategy selection, action, and evaluation and monitoring. Australia's largest organisations and government agencies were surveyed by questionnaire to establish the importance of tasks and subtasks to be performed when completing each of the five phases. Participants possessed high experiences with IT in general and IT outsourcing in particular. When the importance of phases vis‐à‐vis each other were established, the action phase and evaluation and monitoring phase were found to be more significant than the other phases. For the action phase, which was statistically the most significant phase, the tasks of selecting an IT‐outsourcing vendor and determining a suitable IT‐outsourcing contract were dominant and strongly correlated. Findings from the study should help organisations identify and therefore better manage critical decision‐making activities during IT outsourcing particularly those related to vendors and contracts.