中英文资料外文翻译文献Information Systems Outsourcing Life Cycle And Risks Analysis 1. IntroductionInformation systems outsourcing has obtained tremendous attentions in the information technology industry.Although there are a number of reasons for companies to pursuing information systems (IS)outsourcing , the most prominent motivation for IS outsourcing that revealed in the literatures was “cost saving”. Costfactor has been a major decision factors for IS outsourcing.Other than cost factor, there are other reasons for outsourcing decision.The Outsourcing Institute surveyed outsourcing end-users from their membership in 1998 and found that top 10 reasons companies outsource were:Reduce and control operating costs,improve company focus,gain access to world-class capabilities,free internal resources for other purposes, resources are not available internally, accelerate reengineering benefits, function difficult to manage/out of control,make capital funds available, share risks, and cash infusion.Within these top ten outsourcing reasons, there are three items that related to financial concerns, they are operating costs, capital funds available, and cash infusion. Since the phenomenon of wage difference exists in the outsourced countries, it is obvious that outsourcing companies would save remarkable amount of labor cost.According to Gartner, Inc.'s report, world business outsourcing services would grow from $110 billion in 2002 to $173 billion in 2007,a proximately 9.5% annual growth rate.In addition to cost saving concern, there are other factors that influence outsourcing decision, including the awareness of success and risk factors, the outsourcing risks identification and management,and the project quality management. Outsourcing activities are substantially complicated and outsourcing project usually carries a huge array of risks. Unmanaged outsourcing risks will increase total project cost, devaluatesoftware quality, delay project completion time, and finally lower the success rate of the outsourcing project.Outsourcing risks have been discovered in areas such as unexpected transition and management costs, switching costs, costly contractual amendments, disputes and litigation, service debasement, cost escalation, loss of organizational competence, hidden service costs,and so on.Most published outsourcing studies focused on organizational and managerial issues. We believe that IS outsourcing projects embrace various risks and uncertainty that may inhibit the chance of outsourcing success. In addition to service and management related risk issues, we feel that technical issues that restrain the degree of outsourcing success may have been overlooked. These technical issues are project management, software quality, and quality assessment methods that can be used to implement IS outsourcing projects.Unmanaged risks generate loss. We intend to identify the technical risks during outsourcing period, so these technical risks can be properly managed and the cost of outsourcing project can be further reduced. The main purpose of this paper is to identify the different phases of IS outsourcing life cycle, and to discuss the implications of success and risk factors, software quality and project management,and their impacts to the success of IT outsourcing.Most outsourcing initiatives involve strategic planning and management participation, therefore, the decision process is obviously broad and lengthy. In order to conduct a comprehensive study onto outsourcing project risk analysis, we propose an IS outsourcing life cycle framework to be served as a yardstick. Each IS outsourcing phase is named and all inherited risks are identified in this life cycle framework.Furthermore,we propose to use software qualitymanagement tools and methods in order to enhance the success rate of IS outsourcing project.ISO 9000 is a series of quality systems standards developed by the International Organization for Standardization (ISO).ISO's quality standards have been adopted by many countries as a major target for quality certification.Other ISO standards such as ISO 9001, ISO 9000-3,ISO 9004-2, and ISO 9004-4 are quality standards that can be applied to the software industry.Currently, ISO is working on ISO 31000, a risk management guidance standard. These ISO quality systems and risk management standards are generic in nature, however, they may not be sufficient for IS outsourcing practice. This paper, therefore,proposes an outsourcing life cycle framework to distinguish related quality and risk management issues during outsourcing practice.The following sections start with needed theoretical foundations to IS outsourcing,including economic theories, outsourcing contracting theories, and risk theories. The IS outsourcing life cycle framework is then introduced.It continues to discuss the risk implications in precontract,contract, and post-contract phases. ISO standards on quality systems and risk management are discussed and compared in the next section. A conclusion and direction for future study are provided in the last section.2. Theoretical foundations2.1. Economic theories related to outsourcingAlthough there are a number of reasons for pursuing IS outsourcing,the cost savingis a main attraction that leads companies to search for outsourcing opportunities. In principle, five outsourcing related economic theories that lay the groundwork of outsourcing practice, theyare:(1)production cost economics,(2)transaction cost theory,(3)resource based theory,(4)competitive advantage, and(5)economies of scale.Production cost economics was proposed by Williamson, who mentioned that “a firm seeks to maximize its profit also subjects to its production function and market opportunities for selling outputs and buying inputs”. It is clear that production cost economics identifies the phenomenon that a firm may pursue the goal of low-cost production process.Transaction cost theory was proposed by Coase. Transaction cost theory implies that in an economy, there are many economic activities occurred outside the price systems. Transaction costs in business activities are the time and expense of negotiation, and writing and enforcing contracts between buyers and suppliers .When transaction cost is low because of lower uncertainty, companies are expected to adopt outsourcing.The focus of resource-based theory is “the heart of the firm centers on deployment and combination of specific inputs rather than on avoidance of opportunities”. Conner suggested that “Firms as seekers of costly-to-copy inputs for production and distribution”.Through resource-based theory, we can infer that “outsourcing decision is to seek external resources or capability for meeting firm's objectives such as cost-saving and capability improving”.Porter, in his competitive forces model, proposed the concept of competitive advantage. Besanko et al.explicated the term of competitive advantage, through economic concept, as “When a firm(or business unit within a multi-business firm) earns a higher rate of economic profit than the average rate of economic profit of other firms competing within the same market, the firm has a competitive advantage.” Outsourcing decision, therefore, is to seek cost saving that meets the goal of competitive advantage within a firm.The economies of scale is a theoretical foundation for creating and sustaining the consulting business. Information systems(IS) and information technology(IT) consulting firms, in essence, bear the advantage of economies of scale since their average costs decrease because they offer a mass amount of specialized IS/IT services in the marketplace.2.2. Economic implication on contractingAn outsourcing contract defines the provision of services and charges that need to be completed in a contracting period between two contracting parties. Since most IS/IT projects are large in scale, a valuable contract should list complete set of tasks and responsibilities that each contracting party needs to perform. The study of contracting becomes essential because a complete contract setting could eliminate possible opportunistic behavior, confusion, and ambiguity between two contracting parties.Although contracting parties intend to reach a complete contract,in real world, most contracts are incomplete. Incomplete contracts cause not only implementing difficultiesbut also resulting in litigation action. Business relationship may easily be ruined by holding incomplete contracts. In order to reach a complete contract, the contracting parties must pay sufficient attention to remove any ambiguity, confusion, and unidentified and immeasurable conditions/ terms from the contract. According to Besanko et al., incomplete contracting stems from the following three factors: bounded rationality, difficulties on specifying or measuring performance, and asymmetric information.Bounded rationality describes human limitation on information processing, complexity handling, and rational decision-making. An incomplete contract stems from unexpected circumstances that may be ignored during contract negotiation. Most contracts consist of complex product requirements and performance measurements. In reality, it is difficult to specify a set of comprehensive metrics for meeting each party's right and responsibility. Therefore, any vague or open-ended statements in contract will definitely result in an incomplete contract. Lastly, it is possible that each party may not have equal access to all contract-relevant information sources. This situation of asymmetric information results in an unfair negotiation,thus it becomes an incomplete contract.2.3. Risk in outsource contractingRisk can be identified as an undesirable event, a probability function,variance of the distribution of outcomes, or expected loss. Risk can be classified into endogenous and exogenous ris ks. Exogenous risks are“risks over which we have no control and which are not affected by our actions.”. For example, natural disasters such as earthquakes and flood are exogenous risks. Endogenous risks are “risks that are dependent on our actions”.We can infer that risks occurring during outsource contracting should belong to such category.Risk (RE) can be calculated through “a function of the probability of a negative outcome and the importance of the loss due to the occurrence of this outcome:RE = ΣiP(UOi)≠L(UOi) (1) where P(UOi) is the probability of an undesirable outcome i, and L(UOi) is the loss due to the undesirable outcome i.”.Software risks can also be analyzed through two characteristics :uncertainty and loss. Pressman suggested that the best way to analyze software risks is to quantify the level of uncertainty and the degree of loss that associated with each kind of risk. His risk content matches to above mentioned Eq.(1).Pressman classified software risks into the following categories: project risks, technical risks, and business risks.Outsourcing risks stem from various sources. Aubert et al. adopted transaction cost theory and agency theory as the foundation for deriving undesirable events and their associated risk factors.Transaction cost theory has been discussed in the Section 2.2. Agency theory focuses on client's problem while choosing an agent(that is, a service provider), and working relationship building and maintenance, under the restriction of information asymmetry.Various risk factors would be produced if such agent–client relationship becomes crumble.It is evident that a complete contract could eliminate the risk that caused by an incomplete contract and/or possible opportunistic behavior prompted by any contracting party. Opportunistic behavior is one of the main sources that cause transactional risk. Opportunistic behavior occurs when a transactional partner observes away of saving cost or removing responsibility during contracting period, this company may take action to pursue such opportunity. This type of opportunistic behavior could be encouraged if such contract was not completely specified at the first place.Outsourcing risks could generate additional unexpected cost to an outsourcing project. In order to conduct a better IS outsourcing project, identifying possible risk factors and implementing matured risk management process could make information systems outsourcing more successful than ever.rmation system outsourcing life cycleThe life cycle concept is originally used to describe a period of one generation of organism in biological system. In essence, the term of life cycle is the description of all activities that a subject is involved in a period from its birth to its end. The life cycle concept has been applied into project management area. A project life cycle, according to Schwalbe, is a collection of project phases such as concept,development, implementation, and close-out. Within the above mentioned four phases, the first two phases center on “planning”activity and the last two phases focus on “delivery the actual work” Of project management.Similarly, the concept of life cycle can be applied into information systems outsourcing analysis. Information systems outsourcing life cycle describes a sequence of activities to be performed during company's IS outsourcing practice. Hirsch heim and Dibbern once described a client-based IS outsourcing life cycle as: “It starts with the IS outsourcing decision, continues with the outsourcing relationship(life of the contract)and ends with the cancellation or end of the relationship, i.e., the end of the contract. The end of the relationship forces a new outsourcing decision.” It is clear that Hirsch heim and Dibbern viewed “outsourcing relationship” as a determinant in IS outsourcing life cycle.IS outsourcing life cycle starts with outsourcing need and then ends with contract completion. This life cycle restarts with the search for a new outsourcing contract if needed. An outsourcing company may be satisfied with the same outsourcing vendor if the transaction costs remain low, then a new cycle goes on. Otherwise, a new search for an outsourcing vendor may be started. One of the main goals for seeking outsourcing contract is cost minimization. Transaction cost theory(discussed in the Section 2.1)indicates that company pursuing contract costs money, thus low transaction cost will be the driver of extending IS outsourcing life cycle.The span of IS outsourcing life cycle embraces a major portion of contracting activities. The whole IS outsourcing life cycle can be divided into three phases(see Fig.1): pre-contract phase, contract phase, and post-contract phase. Pre-contract phase includes activities before a major contract is signed, such as identifying the need for outsourcing, planning and strategic setting, and outsourcing vendor selection. Contract phase startswhile an outsourcing contract is signed and then lasted until the end of contracting period. It includes activities such as contracting process, transitioning process, and outsourcing project execution. Post-contract phase contains those activities to be done after contract expiration, such as outsourcing project assessment, and making decision for the next outsourcing contract.Fig.1. The IS outsourcing life cycleWhen a company intends to outsource its information systems projects to external entities, several activities are involved in information systems outsourcing life cycle. Specifically, they are:1. Identifying the need for outsourcing:A firm may face strict external environment such as stern market competition,competitor's cost saving through outsourcing, or economic downturn that initiates it to consider outsourcing IS projects. In addition to external environment, some internal factors may also lead to outsourcing consideration. These organizational predicaments include the need for technical skills, financial constraint, investors' request, or simply cost saving concern. A firm needs to carefully conduct a study to its internal and external positioning before making an outsourcing decision.2. Planning and strategic setting:If a firm identifies a need for IS outsourcing, it needs to make sure that the decision to outsource should meet with company's strategic plan and objectives. Later, this firm needs to integrate outsourcing plan into corporate strategy. Many tasks need to be fulfilled during planning and strategic setting stages, including determining outsourcing goals, objectives, scope, schedule, cost, business model, and processes. A careful outsourcing planning prepares a firm for pursuing a successful outsourcing project.3. Outsourcing vendor selection:A firm begins the vendor selection process with the creation of request for information (RFI) and request for proposal (RFP) documents. An outsourcing firm should provide sufficient information about the requirements and expectations for an outsourcing project. After receiving those proposals from vendors, this company needs to select a prospective outsourcing vendor, based on the strategic needs and project requirements.4. Contracting process:A contract negotiation process begins after the company selects a probable outsourcing vendor. Contracting process is critical to the success of an outsourcing project since all the aspects of the contract should be specified and covered, including fundamental, managerial, technological, pricing, financial, and legal features. In order to avoid resulting in an incomplete contract, the final contract should be reviewed by two parties' legal consultants.Most importantly, the service level agreements (SLA) must be clearly identified in the contract.5. Transitioning process:Transitioning process starts after a company signed an outsourcing contract with a vendor. Transition management is defined as “the detailed, desk-level knowledge transfer and documentation of all relevant tasks, technologies, workflows, people, and functions”.Transitioni ng process is a complicate phase in IS outsourcing life cycle since it involves many essential workloads before an outsourcing project can be actually implemented. Robinson et al.characterized transition management into the following components:“employee management, communication management, knowledge management, and quality management”. It is apparent that conducting transitioning process needs the capabilities of human resources, communication skill, knowledge transfer, and quality control.6. Outsourcing project execution:After transitioning process, it is time for vendor and client to execute their outsourcing project. There are four components within this“contract governance” stage:project management, relationship management, change management, and risk management. Any items listed in the contract and its service level agreements (SLAs) need to be delivered and implemented as requested. Especially, client and vendor relationships, change requests and records, and risk variables must be carefully managed and administered.7. Outsourcing project assessment:During the end of an outsourcing project period, vendor must deliver its final product/service for client's approval. The outsourcing client must assess the quality of product/service that provided by its client. The outsourcing client must measure his/her satisfaction level to the product/service provided by the client. A satisfied assessment and good relationship will guarantee the continuation of the next outsourcing contract.The results of the previous activity (that is, project assessment) will be the base of determining the next outsourcing contract. A firm evaluates its satisfaction level based on predetermined outsourcing goals and contracting criteria. An outsourcing company also observes outsourcing cost and risks involved in the project. If a firm is satisfied with the current outsourcing vendor, it is likely that a renewable contract could start with the same vendor. Otherwise, a new “precontract phase” would restart to s earch for a new outsourcing vendor.This activity will lead to a new outsourcing life cycle. Fig.1 shows two dotted arrowlines for these two alternatives: the dotted arrow line 3.a.indicates “renewable contract” path and the dotted arrow line 3.b.indicates “a new contract search” path.Each phase in IS outsourcing life cycle is full of needed activities and processes (see Fig.1). In order to clearly examine the dynamics of risks and outsourcing activities, the following sections provide detailed analyses. The pre-contract phase in IS outsourcing life cycle focuses on the awareness of outsourcing success factors and related risk factors. The contract phase in IS outsourcing life cycle centers on the mechanism of project management and risk management. The post-contract phase in IS outsourcing life cycle concentrates on the need of selecting suitable project quality assessment methods.4. Actions in pre-contract phase: awareness of success and risk factorsThe pre-contract period is the first phase in information systems outsourcing life cycle (see Fig.1). While in this phase, an outsourcing firm should first identify its need for IS outsourcing. After determining the need for IS outsourcing, the firm needs to carefully create an outsourcing plan. This firm must align corporate strategy into its outsourcing plan.In order to well prepare for corporate IS outsourcing, a firm must understand current market situation, its competitiveness, and economic environment. The next important task to be done is to identify outsourcing success factors, which can be used to serve as the guidance for strategic outsourcing planning. In addition to know success factors,an outsourcing firm must also recognize possible risks involved in IS outsourcing, thus allows a firm to formulate a better outsourcing strategy.Conclusion and research directionsThis paper presents a three-phased IS outsourcing life cycle and its associated risk factors that affect the success of outsourcing projects.Outsourcing life cycle is complicated and complex in nature. Outsourcing companies usually invest a great effort to select suitable service vendors However,many risks exit in vendor selection process. Although outsourcing costs are the major reason for doing outsourcing, the firms are seeking outsourcing success through quality assurance and risk control. This decision path is understandable since the outcome of project risks represents the amount of additional project cost. Therefore, carefully manage the project and its risk factors would save outsourcing companies a tremendous amount of money.This paper discusses various issues related to outsourcing success, risk factors, quality assessment methods, and project management techniques. The future research may touch alternate risk estimation methodology. For example, risk uncertainty can be used to identify the accuracy of the outsourcing risk estimation. Another possible method to estimate outsourcing risk is through the Total Cost of Ownership(TCO) method. TCO method has been used in IT management for financial portfolio analysis and investment decision making. Since the concept of risk is in essence the cost (of loss) to outsourcing clients, it thus becomes a possible research method to solve outsourcing decision.信息系统的生命周期和风险分析1.绪言信息系统外包在信息技术工业已经获得了巨大的关注。
