DEFINITIONS OF SUCCESS IN OITO AND OBPO

Since this research sets out to examine critical success factors in OBPO, it is important to establish and define a success construct. (i.e. what constitutes a definition of “success”). This is a surprisingly elusive concept in the published research. Despite more than two decades of ITO research, the definition of success remains under-theorised, a point made by Dibbern et al., (2004), Lee, Miranda and Kim (2004) and Cullen et al., (2008). Researchers have been unable to agree upon a common way of defining and measuring ITO/BPO success, and thus there remains considerable ambiguity around the definitions of ITO/BPO success that have been adopted in published research.

A number of authors have observed that the definition of success in Information Technology Outsourcing (ITO) research has been understood and measured in multiple ways (Westner & Strahringer, 2010). Perhaps more eloquently, Lee et al., (2008) note that the success of outsourcing can manifest in several different ways. Lee et al., (2008) make the case that the most reliable way to measure ITO success is by the degree to which predefined objectives are realised. These researchers further argue that the success of outsourcing should be assessed against predefined strategic, economic and technological objectives and business benefits. They point out that the approach of determining ITO success by measuring the extent to which predetermined benefits are obtained can be traced back to Loh and Venkatraman (1992) in ITO research literature.

In terms of research design, evaluating ITO or BPO success by measuring the degree of attainment of pre-defined objectives presents some challenges in terms of research design. It assumes that organisations included in any research sample did have unambiguous predefined objectives that can be accessed by the researcher(s). It also requires a longitudinal research approach spanning at least 2-3 years, and the capability to measure accurately and independently an organisation’s progress against the predefined objectives. Such a research approach may also have inbuilt confirmation bias, since firms that are not achieving their initial predefined objectives may become reluctant participants in any research sample.

2.9.1 Organisations’ satisfaction with the results of IT Outsourcing (ITO)

Another common approach to measuring IT Outsourcing success is through the level of satisfaction with results. This approach (“expectations fulfilment”) can be traced back through the research literature to Grover, Cheon and Teng (1996). Some researchers (e.g. Westner & Strahringer, 2010) have characterised this approach as “perceived satisfaction with IT outsourcing outcomes”.

However, difficulties with this approach to measuring ITO/BPO success abound. For example, which stakeholders in an organisation are best placed to actually determine “satisfaction with IT outsourcing outcomes”? How to account for varying levels of satisfaction across individuals within the same firm? Can there be an accurate measure of “organisational satisfaction with outsourcing outcomes”? Is organisational satisfaction measuring anything different from the aggregate of individuals’ perceived satisfaction (and dissatisfaction), noting that Fielt, Bandara, Miskon and Gable (2014) have emphasized the complexities of identifying the full range of stakeholders associated with outsourcing projects? Moreover, Koh, Ang and Straub (2004) make the point that service providers are also stakeholders in the success of any outsourcing relationship, so their perspective should be taken into account.

It also appears that many of the research instruments used to measure “satisfaction with outsourcing outcomes” in effect “lead the witness” or “put words in their mouths”; hence there will be room for doubt as to construct validity. It can be argued that a useful proxy for “organisational satisfaction with ITO outcomes” is contract renewal. This argument is advanced by Wreford, Penter, Pervan and Davidson (2012) and Goles and Chin (2005) who point out that the advantage of contract renewal as a proxy is that it is easily measured and goes beyond subjective perceptions. However, a shortcoming in using contract renewal as a proxy for organisational satisfaction with OITO/OBPO outcomes is that it is very difficult to apply to captive centres or internal governance modes.

2.9.2 Success measures for OITO/OBPO

In their paper from 2nd _{Global Sourcing Workshop in 2008, Cullen, Seddon and Willcocks} (2008) set out to develop a new conceptualisation of ITO success. One of their contributions is to suggest that what each firm seeks from outsourcing is different; hence, ITO and BPO success measurements must recognise that these will be idiosyncratic to specific firms and will change over time. In their proposed ITO Success Framework, Cullen et al., (2008, p. 6), present a 25-point list of success measures that is organised around the following major headings:

 Value for Money

 Improved Financial Results  Improved Operations  Strategic Outcomes

Success measures specific for offshore ITO are also considered in Winkler, Dibbern and Heinzl (2009). This paper surveys prior outsourcing literature and concludes that common measures have included:

 Realisation of initial expectations  Level of overall satisfaction

The authors, Winkler et al. (2009) have developed an offshore ITO success construct that combines the following 4 measures:

 Cost reduction  Resource quality  Increased flexibility  Service quality

2.9.3 Differences between success measures for OITO and OBPO

While Dibbern et al., (2004) make the reasonable suggestion that research into phenomena such as OBPO should build on what has been learnt from 15-20 years research into ITO, it is arguable that OBPO requires success constructs that reflect the unique nature of the BPO activities.

Both Wiener, Vogel and Amberg (2010) and Whitaker et al., (2011) make the case that there is a need for additional research to explicitly consider the potential benefits of OBPO. Applying the principles of Cullen et al. (2008) that ITO success is highly specific to business context and will vary over time suggests that success measures for OBPO should also take into account the precise nature of the OBPO activity under consideration.

Whitaker et al., (2011) suggest that OBPO success measures should include:  Cost reduction

 Cycle time reduction

 Improvements in service quality

Wüellenweber et al., (2008) present a BPO success model comprising the following proposed success measures (note that comments below in italics have been added by the author of this research):

 Realised cost savings (cost savings)

 Realised cost transparency (strategic – value for money)  Realised quality improvement (technical service quality)  Realised access to external know how (strategic)

 Realised core competency focus (strategic)  Realised access to superior IT (strategic)

2.9.4 Normative comparisons of success measures for ITO and BPO

Reviewing a sample of 69 papers on BPO, Lacity et al., (2011b) have identified five success measures that are common to both ITO and BPO research and two measures that are unique to BPO, as indicated in the table below.

2.9.5 Research gap in success measures for OBPO

Identification of a success construct for OBPO continues to present difficulties for researchers. In published research on OBPO there are major sources of ambiguity around the success construct that has been adopted. The OBPO success construct adopted for this research includes three measures that appear to have a degree of independence; these being:

 Cost savings

 Technical service quality  Strategic considerations

These should be measured on a firm-specific basis, against pre-defined objectives. Stakeholder satisfaction measured against expectations can also be applied in determining

Table 2.9 Comparison of success measures for ITO and BPO as reported in prior

OBPO success, noting it is essential that valid measures of stakeholder satisfaction be taken on a longitudinal basis (because expectations change with time) and also should reflect a sufficiently broad cross-section of stakeholders.