IT Outsourcing decisions and implementations in Malaysia public healthcare agencies.

Grounding a holistic ITO relationship model using mixed-method approach

Abdul Rahman Ahlan & Yusri Arshad
Dept. of Information Systems, Kulliyyah of ICT, International Islamic University Malaysia, PO BOX 10, Kuala Lumpur, 50728, Malaysia Phone: 03-2056 5157, Fax: 03-2056 5179 E-mail: arahman@iium.edu.my

Research Questions:
1) How ITO decisions and implementations in Malaysia public healthcare sector agencies are done? 2) What motivates ITO decisions in Malaysia public healthcare sector agencies? 3) What are the problems and challenges faced during ITO implementations? 4) How can the ITO relationship be successfully managed? 5) What are the critical factors influencing ITO relationship efficacy? 6) How can resources competences and capabilities contribute to ITO relationship efficacy?

Research Objectives:
1) To understand the process of and key motivations for ITO decisions in the agencies. 2) To explore the ITO implementation strategies in the agencies. 3) To identify critical factors in building, managing and sustaining ITO relationship efficacy. 4) To investigate the roles of resources competences and capabilities in ITO relationship efficacy. 5) To generate and develop an ITO relationship model grounded from the rich evidence obtained. 6) To illustrate how Analytical Hierarchy Process (AHP) can be applied in ITO decisions by service receivers management.

Research Design:
~ Mixed- & multi-methods: i) Literature reviews, ii) Pilot exploratory case study, iii) 4 replicated case studies, iv) case survey, and v) Triangulation. ~ Applied GT and thematic analysis and coding techniques.

Research Findings: RO1: Process of and key motivations for ITO decisions Organisations strategy and due diligence were main processes before tender exercise. Followed MAMPU ITO general guidelines. Standardised across all public sector agencies. Direct negotiation is rare. Key drivers: i) Access to external superior competences and capabilities and technologies; ii) Strategic plan of the organisation; iii) Public sector policies; iv) Opportunities to computerise and modernise the agencies; v) New flexible technologies; vi) Focus on core business processes; vii) Reduced internal human resources costs; vii) Reduced high investment expenses in building own IT departments and infrastructures; and viii) Inadequate internal resources and staff competences and capabilities.
@ - This research is funded by IIUM Endowment Type B EDW B 0902-203 # - A byproduct of this research is a PhD thesis.

RO2: ITO implementation strategies Comprises three main activities: 1) selecting one or more service providers; 2) building and structuring the ITO relationship; and 3) managing the resulting relationship. RO3: Critical factors in building, managing and sustaining ITO relationship efficacy. Initiation, Planning, Due diligence, Financial exchange and Top management support (Strategy); Contract element (Contract/SLA); Governance; SP competence and capability, Structured approach and representations, SR competence and capability, Monitoring and controlling, Challenges or problems, Performance, (Competence and Capability); Culture dimension; Behavioural dimension, Psychological dimension (Working relationship context), benchmarking and monitoring and control and knowledge management and sharing. RO4: Roles of resources competences and capabilities in ITO relationship efficacy. In tender proposal and contract document, SPs competences and capabilities are a serious consideration for selection. Formal and informal relationship mechanisms were crucial and they complemented each other. In ITO relationship, SR teams also must have acceptable level of similar resources competences and capabilities to complement, monitor and control each other. RO5: Development of an ITO relationship model Figure 1 below shows the generated model for the study.
Institutional (Higher-level Decision Maker)

Structure

Organisational (Middle-level Decision Maker)

ITO Strategic Decisions Explicit Factors Tacit Factors Service Receiver (Stakeholders)
Initiation Planning
1

ITO Implementations
2

ITO strategy Due Diligence Governance Behavioural Dimensions

Contract/SLA Project managent Knowledge mgt. Psychological Dimensions

Formal Relationship Psychological & Behavioural Relationship

(Competence/capability)
3

(Competence/capability)
4

E f f i c a c y

Working relationship context

Service Provider (Stakeholders)

External Factors

Execution

Monitoring & Controlling

Closing

PMBOK ITO Project Management Process

Figure 1: A holistic integrated staged-based ITO relationship process model ! The researchers wish to thank case study informants, MOH staff, RMC IIUM and others for their kind cooperation and contribution in this research.

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