Applying the Value Re-engineering Framework to Services: A Longitudinal IT Outsourcing Case

This paper studies the development of outsourced IT services through a longitudinal examination of an IT outsourcing case. We apply the demand-supply chain model to evaluate how the value offering of an IT service can be managed. The case study indicates that the customer company must make a trade-off between managing its IT, or the IT need of its business. If the customer chooses the latter alternative, the IT service provider can increase its value offering by taking the ownership of the customer’s IT environment. This calls for retaining a constant area of transparency between the customer and the IT service provider, and moving this area towards the customer’s core business. We conclude with a discussion on the theoretical implications and practical recommendations for developing the outsourcing relationship.