What drives netsourcing decisions? An empirical analysis
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What drives netsourcing decisions? An empirical analysis Claudia Loebbecke1 and Claudio Huyskens1 1 Department of Media Management, University of Cologne, Pohligstr. 1, Cologne, Germany
Correspondence: Claudia Loebbecke, Department of Media Management, University of Cologne, Pohligstr. 1, Cologne 50969, Germany. Tel: þ 49 221 470 5364; E-mail: [email protected]
Abstract Netsourcing, a rather innovative form of web-enabled value creation, describes outsourcing of selected software applications to external service providers via the Internet. It promises flexibility and cost advantages over operating software applications in-house. However, it also raises the question which software applications corporate users should netsource and which they should keep in-house. To answer these questions, we develop a research framework with seven independent variables derived from the literature on full information technology outsourcing. On data collected in a 2004 survey among the 500 largest German companies, we apply a logistic regression analysis. As a result, we find significant statistical support for strategic management variables and no support for transaction cost economics variables as being relevant to the netsourcing decision. We conclude the paper with some lessons learned and suggestions for further research. European Journal of Information Systems (2006) 15, 415–423. doi:10.1057/palgrave.ejis.3000621 Keywords: netsourcing; selective outsourcing; web-enabled value creation; strategic management; transaction cost economics
Introduction
Received: 2 November 2005 Revised: 23 February 2006 Accepted: 9 March 2006
Offering selected web-enabled software applications and application modules to corporate users has recently gained attention in the business press as reports on Salesforce.com, USinternetworking, and other service providers and market volume estimates of up to 21 billion USD for 2007 suggest. Web services add a new chapter to the field of web-enabled software. They present the glue that allows for very diverse web-enabled software applications and application modules to be integrated and to interoperate (Ferris & Farrell, 2003; Williams, 2003). Putting emphasis on integration and interoperability, web services give corporate customers the opportunity to selectively source single applications and even application modules from diverse providers. Not being dependent on a single provider owing to a commutability of software applications permits corporate customers to regard software application sourcing more transactionoriented as suggested by utility computing, which – among other elements – describes software applications as ‘available as needed and billed according to usage, much like water and electricity today’ (Ross & Westerman, 2004, p. 6). For potential customers, the question remains whether and when to take advantage of such modularized offerings, in contrast to outsourcing almost their complete information technology (IT) infrastructure or – in the other extreme – to keeping all IT in-house
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