Managing the internal IT function’s changing role when outsourcing

Sammanfattning: This thesis investigates the changing role of the internal IT function when IT services/capabilities are outsourced to one or more external vendors. More closely we analyze how the process of outsourcing affects several dimensions of the IT function, such as strategic alignment, organizational structures, governance, innovation, capabilities and vendor management. The chosen method is of explorative/inductive nature and the selected research approach is in-depth qualitative interviews with nine different companies within a range of different industries. Our findings show that for a successful outsourcing outcome, a large degree of management’s focus and attention must also be put on handling the internal IT function and its people and processes. Business orientation, leadership skills, sourcing skills and the ability to create a trustful relationship were all crucial factors. Standardization and formalization of processes were concluded to be prerequisites when outsourcing, but also reduced the company’s flexibility and innovation capacity to some extent. The contract and service level agreements was found to only be factors making the outsourcing possible, but not making it a success. A challenge that IT managers need to pay extra attention to is to know what processes and capabilities to outsource. Loosing critical competence was a major risk that many managers faced after the deal, resulting in confusion and poor performance. The thesis also found that the organizational structure, including the forum structures, did not tend to change in any significant way. The reason was identified as a willingness to reduce the transitional risks that an outsourcing deal brings along. Furthermore, it was only in a few cases that the organizations had implemented new roles and functions.