Anticipating and considering customers' flexibility demands in is outsourcing relationships

Information systems (IS) outsourcing relationships are determined by uncertainties and changing business environments for both client and vendor over a long-term outsourcing lifecycle. Although IS outsourcing arrangements have been widely researched, little attention has been paid to how changing business circumstances and resulting customer demands can be systematically assessed, considered, and integrated in adapted service offerings. In this paper we argue that flexibility and agility are the key to handle uncertainty in IS outsourcing and to achieve a continuous fit in the outsourcing relationship. However, the later clients and vendors identify changing requirements the more expensive it generally becomes to provide the necessary flexibility in outsourcing arrangements. This paper proposes an assessment instrument for a systematic identification of changing customer demands on a business level and resulting flexibility requirements on an IT level that clients and vendors can utilize to structure their discussions in an early phase of an outsourcing relationship. Based on a thorough literature review and a requirements analysis with qualitative expert interviews, relevant dimensions and parameters of customers’ flexibility requirements are derived. These dimensions are involved in the design of the assessment instrument. Managerial implications and directions for future research, especially on the applicability and evaluation of the instrument are discussed.