Information systems sourcing: examining the privatization option in USA public administration

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Abstract

The process and content of decision-making on sourcing information systems (IS) is assessed. Two case histories from the USA public sector are examined in detail. We find that outsourcing IS problems, as opposed to tasks, rarely works in either private or public sectors. The findings suggest that both sectors must develop similar IS competencies before considering sourcing decisions. These include fostering relationships with senior management, bench-marking performance, creating shared IS objectives, understanding requirements, diagnosing IS problems, evaluating in-house versus market capabilities and, in the case of outsourcing, developing competencies in contract negotiation and post-contract management. The major difference between public and private sector sourcing was found to be that public sector agencies faced more environmental constraints, including dictated budgets and requirements, and restrictions on civil servant salaries.

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