Study Of Performance Measurement In The Outsourcing Decision (eBook)

Front Cover 1
A Study of Performance Measurement in the Outsourcing Decision 4
Copyright Page 5
Contents 6
Executive Summary 10
Acknowledgement 12
Chapter 1. Introduction 14
Chapter 2. Literature Review 16
2.1 The development of outsourcing 18
2.1.1 Developments in information and communication technologies 19
2.1.2 Business process perspective 19
2.1.3 Globalisation 20
2.1.4 Public sector reforms 21
2.2 The benefits of outsourcing 21
2.2.1 Cost reduction 21
2.2.2 Performance improvement 21
2.2.3 Flexibility 22
2.2.4 Specialisation 22
2.2.5 Access to innovation 23
2.3 The risks of outsourcing 23
2.3.1 Cost increases 23
2.3.2 Supply market risk 24
2.3.3 Loss of skills 25
2.3.4 Organisational change implications 25
2.4 Key motivations for outsourcing 26
2.4.1 Cost efficiencies 26
2.4.2 Focusing on core competencies 26
2.4.3 Enhanced reliability and quality 27
2.5 Types of outsourcing arrangements 28
2.5.1 Local in-house sourcing 28
2.5.2 Outsourcing to local service providers 30
2.5.3 Sourcing from foreign subsidiaries 30
2.5.4 Outsourcing to foreign service providers 30
2.6 Outsourcing and performance measurement 31
2.7 Management accounting and outsourcing 34
2.7.1 Economic value added 35
2.8 Problems with the outsourcing process 36
2.8.1 No formal outsourcing process 37
2.8.2 Misapplication of the core competence concept 37
2.8.3 Lack of emphasis on performance measurement in outsourcing 39
2.9 Requirements for an outsourcing framework 40
2.9.1 Performance measurement 40
2.9.2 The resource-based view 41
2.9.3 The strategic context 42
2.10 Business services perspective 43
Chapter 3. Background to the Development of the Outsourcing Framework 44
3.1 Relative capability position in the process 46
3.2 Importance of the process to competitive advantage 46
Chapter 4. Practical Application of the Outsourcing Framework 48
Chapter 5. The Outsourcing Framework in Action at the Financial Services Organisation 52
5.1 Stage 1: Process importance analysis 52
5.1.1 The CSF method 55
5.1.2 Illustration: CSFs in action at the FSO 56
5.1.3 Using the CSFs to determine process importance 59
5.1.4 Illustration: Using CSFs to determine process importance at the FSO 60
5.2 Stage 2: Assessing process capability 63
5.2.1 Illustration: Process cost analysis in action at the FSO 64
5.2.2 Process benchmarking 67
5.2.3 Integrating benchmarking into the outsourcing process 68
5.2.4 Illustration: Process analysis in action at the FSO 70
5.2.5 Illustration: The experiences of the FSO with benchmarking in the outsourcing process 76
5.3 Stage 3: Selecting the sourcing strategy 80
5.3.1 An overview of the sourcing strategies 82
5.3.2 Illustration: Invest to perform internally – the case of mortgages 86
5.3.3 Illustration: Outsourcing cheque clearing at the FSO 88
5.4 Stage 4: Implementing and managing the outsourcing arrangement 91
5.4.1 Contracting issues 91
5.4.2 Illustration: Implementing and managing the outsourcing of cheque clearing 92
5.4.3 Managing the relationship 97
5.4.4 Illustration: Managing the cheque clearing relationship 100
Chapter 6. Evaluation of the Outsourcing Framework 104
Chapter 7. Conclusion and Management Implications 110
References 114
Appendices 120
Index 134
A 134
B 134
C 134
D 134
E 134
F 134
G 135
H 135
I 135
J 135
K 135
L 135
M 135
N 135
O 135
P 136
R 137
S 137
T 137
U 137
V 137