Service and

International Journal of Management Practice, 2006

Virtually all Enterprise Systems (ES) implementation projects start with a purchase contract. Yet there has been little research on ES contracting approaches, and how those approaches relate to the previous literature on productivity gains from spending on those systems. Building on the IT productivity paradox notion, this paper proposes a model of divergent ES contracting approaches in the service and manufacturing sectors. Two main ES contracting approaches are defined -the revisionist-adversarial approach, associated with ES contracting elements geared at potentially short-term and change-oriented relationships with ES vendors; and the preservationist-cooperative approach, associated with ES contracting elements aimed at mutual cooperation over the long run with ES vendors. It is proposed that service sector organisations generally display a preference toward the revisionist-adversarial approach, whereas manufacturing sector organisations generally display a preference toward a preservationist-cooperative approach. These propositions, which are aligned with the IT productivity paradox phenomenon, are supported by a survey of 116 organisations.

Information Technology for Development, 2019

This research investigates and compares the process of Enterprise System implementation in transition economies and developed countries. It describes the practical aspects of the implementation of an Enterprise System based on the SAP applications suite. The propositions on the design of the contract and governance of the project are then derived from Transaction Cost Economy and Contract Theory. Based on a multiple case study in four projects, the similarities and differences in the contracting and governance of the Enterprise System projects in the transition economy and developed economies are examined, and the causes of those differences are explored. The results show that the projects in the developed countries tend to be performed in a more cooperative and benign way, while in a transition economy the approach is based more on a client-supplier, muscular way of managing the relationship, which causes additional problems during project execution, and higher transaction costs.

This paper investigates the new business model of outcome-based contracts where the firm is tasked to deliver outcomes of equipment as a service contract instead of the traditional maintenance, repair and overhaul activities (e.g. power-by-the-hour ® engine service contract). Through a qualitative study of two outcome-based contracts between BAE Systems and MBDA and the UK Ministry of Defence, we derive three value drivers of information, material and people transformation. Mapping it with transaction cost literature, we then propose five relational assets based on the value drivers i.e. three value driven alignments and two partnership inputs; and study the relationships between the relational assets and contract performance through a quantitative survey and by applying the Partial Least Square (PLS) method. Our study shows that behavioural and information alignment is important to achieve outcomes. However, material and equipment alignment (i.e. joint supply chain) does not have a significant effect on contract performance. In addition, perceived control and empowerment mediated the relationship between partnership inputs and value-driven alignments. Our study provides a more integrated view of how various theoretical domains overlap in the understanding of business models and contribute to the understanding of value drivers and partnership factors in achieving performance in outcome-based contracts.

The National Programme for Information Technology is the largest civil IT programme worldwide at an estimated cost of £6.2 bn over a ten-year period. Launched in 2002, it provides an opportunity for the IT service industry to develop business models in the UK healthcare sector in which, historically, has seen low investment in IT services. Nearly four years on—and under pressure from government and senior hospital managers to deliver working systems—the relationship between public sector organisations and private sector firms is once again under increasing scrutiny. All the IT systems are late and over-budget with vendors either leaving the programme or re-negotiating their contracts with Connecting for Health, the government agency which runs the National Programme for Information (National Programme). In this study, we investigate the role of IT vendors in fulfilling the aims and objectives of the National Programme in the context of market, business, managerial, and technical fac...

Wrycza S., Maślankowski J. (eds) Information Systems: Research, Development, Applications, Education. SIGSAND/PLAIS 2019. Lecture Notes in Business Information Processing, vol 359. Springer, Cham, ISBN 978-3-030-29607-0 (print), 978-3-030-29608-7 (online), 2019

This study presents the results of a case study on the level of involvement needed to reduce the information asymmetry with regards to the scope of the Enterprise System implementation. The results show that the cost of determining the particulars of the transaction are too high for the parties to bear before the transaction is actually carried out. The holdup problem, therefore, exists, as proposed by the Transaction Cost Economics.

This study introduces the concept of outcome-based contracting (OBC) as the mechanism for firms to focus on delivering value-in-use, and as the driver for value co-creation as the firm would need to jointly deliver outcomes with the customer. The paper analyses two OBC-type contracts between the UK Ministry of Defence and two of its industrial partners. We find that in delivering to outcomes and achieving value-in-use, the state-dependent nature of value in usage „pushes back‟ into the organization, requiring the firm to re-evaluate the way they are structured to receive changes from customer state-dependencies so as to deliver a better service. Our analysis presents seven generic attributes of value co-creation (AVCs) essential for the capability to deliver value-in-use. These are behavioral alignment, process alignment, congruence in customer expectations, congruence in firm expectations, empowerment and perceived control, behavioral transformation, and complementary competencies. The attributes discovered through qualitative data were matched with previous academic literature and operationalized and a measurement instrument was developed. The instrument was then validated by performing an exploratory and second order confirmatory factor analysis.

Two outcome-based defence contracts are studied in the attempt to better understand the provision of services in maintenance, repair and overhaul (MRO) environment that is contracted on the outcome of the equipment, rather than the provision of equipment. The nature of the contract changes the dynamics of the delivery, bringing complex issues such as customer behaviours and involvement to the forefront, with both customer and firm focused on value co-creation and co-production, rather than each party’s contractual obligation. We uncover four areas that are crucial in the understanding of value coproduction in service delivery and analysed them through a systems approach combined with the application of the service-dominant logic, both considered as the theoretical underpinnings of service science.

International Journal of Operations & Production Management, 2018

Purpose The purpose of this paper is to investigate purchasing practices in service triads by exploring the link between ex ante contracting and ex post contract management and how these practices influence the satisfaction of buyers and suppliers (in concessionary arrangements) with their relationship in terms of meeting the needs of the buyer’s customers. Design/methodology/approach An in-depth exploratory multiple case study was carried out in a shop-in-shop context. Multi-method and multi-source data collection included interviews, documents and the contracts between buyer and supplier, providing evidence of the formal and relational structures in both the contracting and contract management stages. Findings The case findings provide evidence that behavioural standards established in a social contract are important prerequisites for the establishment and subsequent management of a formal contract. Second, this study shows that, when outsourcing core services in a service triad, ...

International Conference on Information Systems, 1996

Experiences of making software development and purchase contracts between a user organization and several software vendors are analyzed over a decade-long period. Three information systems histories are presented as case examples. The analysis is based on observations of the contract negotiations. Transaction cost framework is used to explain the forms of the joint organizational relations between the parties. The analysis yields a descriptive model that depicts in a concise way how the relationships have evolved. The model identifies encounters between the vendors and the client which may change the contractual state between the parties. The passages between consecutive encounters are called episodes. By perceiving contractual systems development as a series of encounters and episodes, it is possible to identify the critical turning points of development work and to display the dynamics of contracting. The paper ends with a discussion of the findings and some implications for researchers and practitioners.

SSRN Electronic Journal, 2000

This paper focuses on contractual provisions in external sourcing of innovative services. Such agreements require protection of key knowledge assets, whilst simultaneously providing incentives for heuristic search to enable problem solving and knowledge transfer. We conceptualize two distinct dimensions of knowledge in the inter-organizational context: problem solving complexity and the need for synthesis of knowledge bases across organizational boundaries. Integrating explanations from transaction cost economics, incomplete contracting theory and knowledge-based research, we analyze a sample of IT outsourcing contracts to investigate the role of three contractual provisions: joint decision making rights, intellectual property safeguards, as well as the intensity of the incentives. Contracts for bilateral agreements that involve high problem solving complexity contain stronger and more clearly elucidated joint decision rights, which rely less on measurable outcomes, in conjunction with strong IP safeguards and low powered incentives. When prior experience of the vendor is critical for fulfillment of the contracted task, contracts include joint decision rights. Exchanges characterized by complementarity in knowledge bases across firms are more likely to be governed by high powered incentives contracts while exchanges characterized by co-specialization are governed by contracting arrangements involving joint decision rights in conjunction with low powered incentives.