Subtitle: Sinotrans, National Retail Systems form joint venture to provide end-to-end service between China, U.S.

The call for new types of collaboration in outsourcing saw the development of the enterprise partnership model by Xchanging in 2001. The case looks at the history of one such partnership with BAE Systems. History shows why the model was attractive to BAE Systems against several other models. In Part 1 of the case, we look at and ask students to assess the in-house, fee-for-service outsourcing and management consultancy options for transforming HR through shared services. In Part 2, the case details the distinctive features of a joint-venture model that was eventually adopted and of the supplier competencies needed. We follow the relationship through the phases of preparation, realignment, streamlining, and continuous improvement, initially up to 2003. Students are asked to assess the model, progress, and what the future holds. In the third part of the case, we follow subsequent developments, including the change in the nature of outsourcing with BAE Systems from March 2007, the launch of Xchanging on the stock market in April 2007, its continued expansion, and its troubled history from 2010 to 2012. The case gives insight into the conduct of a distinctly different form of outsourcing, into how the client and the supplier deal with outsourcing over a number of years, and how a supplier navigates through a highly dynamic 21st century global environment while trying to expand its market services and revenue growth.

Even in semi-recessionary times, in the developed economies IT and business process outsourcing have been some of the biggest business trends and highest growth sectors. For example on our figures IT outsourcing global revenues moved from US$ 154 billion to over US$ 200 billion across the 2002–5 period. Business process outsourcing (BPO) grew more than 25% per annum across 2002–3 in the UK. In Europe, across 2002–5 BPO revenues increased from 43 billion to 72 billion Euros. The USA also experienced noteworthy BPO growth throughout the 2000–2008 period. These figures are likely to increase by at least 7% (ITO) and 10% (BPO) per annum over the 2005–12 period (Willcocks and Cullen, 2005; Oshri et al., 2008) But despite outsourcing's rise to become a perennial, if not yet routine way of managing IT and business processes, it is surprising that its knowledge management implications have received so little attention, something, we predict, will continue over the next five years Willcocks and Craig, 2007).KeywordsSocial CapitalBusiness ProcessStructural CapitalIntellectual CapitalKnowledge CapitalThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

In this chapter, we present our ITO decision framework which guides practitioners to consider business, economic, and technical factors. Originally published as Lacity, Willcocks, and Feeny (1996), this framework is still remarkably relevant. When discussing business factors, we dismiss the traditional "core versus non-core" criterion because we found it was difficult for practitioners to differentiate IT activities on this basis. Instead, we guide practitioners to consider an IT activity's contribution to competitive advantage as well as to its critical support of daily business operations. In the discussion of economic factors, we challenge practitioners to examine the practices that lead to economic efficiency rather than just economies of scale. Surely, suppliers operate on a larger scale than internal IT departments, but economic efficiency depends more on practices such as standardization, centralization, and tight controls than size. In the discussion of technical issues, we discuss a technology's maturity (stability, measurability, and requirements certainty) and technology's integration with other business functions as the most important technical criteria to consider. This framework continues to be used by practitioners and is still widely cited by academics.KeywordsSwitching CostBusiness OperationSenior ExecutiveStrategic PartnershipExternal SupplierThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Senior executives continue to seek ways to transform back-office processes such as information technology (IT), human resource management, finance, and accounting. Can these functions be managed to simultaneously reduce costs and improve service? Historically, senior executives have used several models of transformation: do-it-yourself, management consultants, fee-for-service outsourcing, and even the occasional joint venture. Although these transformation models remain viable for various contexts, a more recent model has emerged that warrants attention-the enterprise partnership. With an enterprise partnership, the customer and supplier create a jointly owned enterprise that both services the customer investor as well as seeks external customers. The enterprise partnership model is illustrated through an in-depth case study of BAE Systems and Xchanging's partnership for human resource management, including underlying IT support. The chapter provides a framework and assesses the lessons for selecting and managing back-office transformations. Many lessons seem counterintuitive to previous research findings, including selecting a supplier with generic business competencies rather than domain-specific knowledge, selecting a culturally "incompatible" supplier, and delaying due diligence until after the deal is well under way.

While outsourcing is currently one of the biggest business trends (and highest growth sectors),1 it is surprising that its knowledge management implications have received so little attention. What actually happens to knowledge when clients outsource? Our research shows that most clients lack the means and experience to assign value to the knowledge they are transferring and receiving. Furthermore, most clients have no real understanding of how new knowledge can be created in outsourcing situations, let alone exploited. Nor are they inclined to assign that much importance to knowledge management because the outsourced activities are considered “non-core.” But whatever the cause, managing knowledge when an organization outsources is a serious gap in practice. We address this gap by describing intellectual capital, and how it can be developed by harnessing social capital. We then apply these ideas to three outsourcing arrangements to show how intellectual, or knowledge, capital can either be a missed opportunity, or can be developed and leveraged to organizational advantage.

In 1998, Feeny and Willcocks published the core information technology (IT) capabilities framework that identified four strategic domains (business, technology, third-party sourcing, and governance) and nine capabilities for high performing IT functions.1 This framework was subsequently adopted by many large organizations seeking to deliver highly effective and cost-efficient IT services. This chapter extends the framework beyond IT by applying it to other back offices, including human resources, accounting, finance, and procurement. The resulting framework offers a powerful model for creating high performing back offices in terms of strategic agility, service excellence, and cost-efficiency

With the recent global recession, senior executives are desperate to cut costs from back office functions like information technology, human resource management, finance and accounting. Outsourcing these functions has been the primary cost reduction strategy for the past decade, and remains a viable option. But some innovative companies actually see the potential to participate as a supplier in the outsourcing space. Companies such as Lloyds of London, Bank of America, Barclays Bank, and BAE Systems have transformed high-cost, low-performing back office functions into commercial enterprises by partnering with key suppliers. The suppliers typically centralize, standardize, and web-enable the customer’s back office processes, retrain, empower, and motivate transitioned back office staff, and leverage the assets to attract external customers. The results are impressive: lower costs, better service, and revenue generation. Of course, such radical transformation is never pain-free. We aim to help senior executives assess the viability of commercialization of their own back offices and offer eight lessons derived from one customer’s experiences.

Most corporate executives are by now convinced that the scale and pervasiveness of technological change requires a fundamental review of business strategy Web-based technology is creating opportunities to rethink business models, processes and relationships along the whole length of the supply chain. Successful e-strategies translate established strategic concepts into contexts in which they previously were not economically viable. For example, in the 1960s and 1970s IBM won the loyalty of major corporate customers through highly paid account executives who provided so-called relationship management. Today that same concept - now technologically based - is being deployed to tailor support to individual consumers.But there is still enormous uncertainty within the business community about the future shape of e-business - as evidenced by the mood swings of the financial markets and the faltering fortunes of even the icons of the New Economy. The sheer scope of potential change presents some challenges: How can executives make sense of the burgeoning e-business ideas, and where does strategic analysis begin? Behind the new e-business language, how new are the strategic concepts? And what form will a company's strategic e-opportunity take? \ As a platform for answering those questions and exploring the new strategic landscape, author David Feeny constructs a coherent map of the e-opportunity. He identifies three layers of e-opportunity, or domains, that exist within operations, marketing and customer service. In each domain, technology may enable a radical new vision of what a business can accomplish. Although every business should be considering opportunities across all three domains, the potential significance of each domain and of individual ideas within it will vary widely across industry sectors and businesses.

Today's vast array of web applications for supply-chain integration, salesforce automation, work group collaboration - and the sale of everything from equities to automobiles - makes it perfectly clear that information technology has evolved beyond the role of mere infrastructure in support of business strategy In more and more industries today, IT is the business strategy. Unfortunately, many CEOs are ill-equipped to manage effectively in the Information Age. The problem has less to do with IT literacy than with a range of behaviors and attitudes that cause such CEOs to shirk their IT responsibilities By their actions, many CEOs send negative signals about the role of information technology to other leaders in their organization who then repeat the behavior. Companies with such leaders frequently fail to reap business advantage from information technology. The authors describe seven types of CEOs, their behaviors and attitudes toward IT, and explain why all but one are decidedly unfit to lead companies in the information Age. Only the "believer CEO" is ready to play a constructive role in his or her company's use of information technology. Believers understand that IT enables strategic advantage, and they demonstrate such beliefs in their daily actions. Believers are involved in IT decision making and are preactive in addressing IT problems and opportunities. They seek advice from a variety of sources, study the IT strategies of competitors, and set examples for other managers in their company to follow. The authors provide many examples of believer CEOs - John Browne of British Petroleum, Ralph larsen of Johnson & Johnson, Jack Welch of General Electric, Toshifumi Suzuki of Seven-Eleven Japan, and lan Robertson of Land Rover, among others. They describe how each infused his organization with a positive altitude toward IT and contrast their actions and beliefs with those of the six failing archetypes. They explain how these believer CEOs played a critical role in their corporate IT strategies, how they crafted IT-savvy organizational cultures, and how these actions benefited their businesses. Realizing that many CEOs will see their current attitudes reflected in those of the six failing archetypes, the authors prescribe a variety of methods for leaders to address their shortcomings and master the techniques of believers.