A Simulation Model for Risk Management Support in IT Outsourcing

Tarcio Bezerra, Seth Bullock, Antao Moura

2014

Abstract

IT Outsourcing (ITO) is the practice to delegate organizational IT functions to a third party. However, this practice introduces important risks for customer organizations. We have developed a system dynamics simulation model to support ITO decision making that considers a dynamic and integrated view of capabilities management and benefits management. Two IT capabilities are modelled: Contract Monitoring (on the customer's side) and Service Delivery (on the supplier's side). In this paper the proposed model is used to assess the risks presented by a deficit in these capabilities. The results of our experiments indicate that the lack of contract monitoring capability in ITO contracting organizations directly impacts on service conclusion time and influences the cost of contract management, which is an important risk factor related to exceeding the ITO budget. It was also found that low levels of service delivery capability in the supplier most significantly impact the cost of rework and the number of penalties. These factors influence the profitability of the supplier and may induce it to abandon the contract prematurely.

Paper Citation

in Harvard Style

Bezerra T., Bullock S. and Moura A. (2014). A Simulation Model for Risk Management Support in IT Outsourcing . In Proceedings of the 4th International Conference on Simulation and Modeling Methodologies, Technologies and Applications - Volume 1: SIMULTECH, ISBN 978-989-758-038-3, pages 339-351. DOI: 10.5220/0005035703390351

in Bibtex Style

@conference{simultech14,
author={Tarcio Bezerra and Seth Bullock and Antao Moura},
title={A Simulation Model for Risk Management Support in IT Outsourcing},
booktitle={Proceedings of the 4th International Conference on Simulation and Modeling Methodologies, Technologies and Applications - Volume 1: SIMULTECH,},
year={2014},
pages={339-351},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0005035703390351},
isbn={978-989-758-038-3},
}

in EndNote Style

TY - CONF
JO - Proceedings of the 4th International Conference on Simulation and Modeling Methodologies, Technologies and Applications - Volume 1: SIMULTECH,
TI - A Simulation Model for Risk Management Support in IT Outsourcing
SN - 978-989-758-038-3
AU - Bezerra T.
AU - Bullock S.
AU - Moura A.
PY - 2014
SP - 339
EP - 351
DO - 10.5220/0005035703390351