On April 15, 2008 I have submitted together with Georg Hodosi and Harald Kjellin a project proposal to the Swedish Research Council having the title: “A methodology for assessing the risk exposure to support IT outsourcing decisions”.
The decision process for companies to outsource information technology (IT) or not is a substantial business change and in many cases the competence to take such decisions is limited and has major consequences for the company future performance. Therefore in the project we have proposed the development of a methodology that can be used for assessing the risk exposure in support of IT outsourcing (ITO) decisions that will be carried out through:
1. A detailed analyses and a comparative study of different approaches and methods using transaction cost theory for assessing the risk exposure in IT outsourcing decisions.
2. The development of a new algorithm to evaluate the risk exposure in support of IT outsourcing decisions.
3. The empirically validation of the current methodology for evaluating the risk exposure in IT outsourcing decisions through a case study research approach.
In the development of the methodology a preliminary research has been done in 2007 and a software decision tool was developed based on the Transaction Cost Theory (TCT) in order to give us a quantitative measure of the IT outsourcing risks.
The results of this research we believe that it will bring a lot of benefits like a better understanding of the involved decision parameters and their impact on ITO decisions to those who are working in ITO research, and also to IT executives or IT consultants. The new methodology will be based on using TCT for assessing the risk exposure (including the average losses) together with a set of best practices. Moreover the methodology will improve the way how the risk exposure is evaluated now in an area where the loss is unpredictable. Furthermore the implementation of the methodology in a software decision tool could have a high usage in the industry and we believe that this “methodology platform” will enable further the development and optimization of ITO decision process.