The governance of information technology service provision

The governance of information technology (IT) service provision entails all those elements of the structure and process of contracting and organisation that are necessary in order to deliver effective and efficient IT services within today's organisations. This thesis develops a framework integrating those elements of governance with a view to explaining actual governance structures and to guiding relevant decisions in practice. Until the late 1980s, the principal concerns with respect to the organisation of IT activities revolved around the issues of centralisation versus decentralisation and end-user computing versus specialist control. Whilst contracts for various systems and services have always been a significant part of the IT department's activity, the issue of structuring such contracts took a prominent position on the management agenda in the beginning of 1990s with the proliferation of large contracts of the 'total outsourcing' kind. IT outsourcing rekindled interest in and reshaped the agenda of the organisation of IT provision. The debate on IT outsourcing provided the motivation and the starting point of this thesis. Thus, chapter 1 reviews this debate and, following on the opinion of others, recasts the question of 'whether to outsource or not' as 'how to set up the governance (i. e. the structure and process of contracting and organisation) of IT service provision'. In order to shed some light on the elements of governance, chapter 2 turns on a range of economic theories of the firm. These theories are critically reviewed and some preliminary suggestions as to how they might inform the governance of IT are put forth. The chapter concludes by setting the theoretical foundations for the rest of the thesis. The notion of a governance continuum between the ideal pure market and the ideal pure hierarchy is introduced. Actual governance structures, it is argued, can be placed on this continuum as individual instances. Before advancing onto more substantive work, chapter 3 pauses to reflect on the epistemological basis of this research project. The main principles of the epistemological position adopted here are taken from the philosophical arguments of transcendental realism. The implications of this epistemological position for the empirical methods and the theoretical claims made in this thesis are also examined. Chapter 4 documents an intensive case study at British Petroleum Plc. The purpose of this case study was to draw lessons from practice and to assess the relevance of the theories of chapter 2. This case study was an interactive learning process through which the researcher sought access to management practice in order to assess economic theories, while the managers at BP sought a broader understanding of IT outsourcing. The outcome of this interaction was the S-CAGE framework which coupled theoretical insights with practical relevance. The S-CAGE (Service Clustering And Governance Establishment) framework is described in detail in chapter 5. It is put forth as both an explanatory and a normative account of the governance of IT service provision. It is based on the notion of governance continuum, it introduces the idea of grouping services into clusters and it provides a classification of the elements of governance that should be customised to the characteristics of each cluster of services. Chapter 6 presents two further case studies aimed at evaluating the usefulness of SCAGE in understanding and explaining alternative outsourcing practices. ICI and Anglian Water have been visited for this purpose. On the basis of these cases, the concluding chapter summarises the strengths and limitations of the proposed framework. An attempt is also made to set forth some preliminary theoretical ideas extending the notions of clustering and governance continuum. The thesis concludes with a final short illustration of the use of the S-CAGE framework.