Risk framework for outsourced strategic IT system development from the client perspective

While a series of risks connected with IT development and IT outsourcing are identified in the literature, research on risk in the context of strategic IT system development outsourcing is almost non-existent. This study investigates risks that are most likely to cause failure in a strategic IT system development outsourcing project, from the client perspective. This study examines strategic IT systems from a business strategy perspective and presents the characteristics of a strategic IT system by synthesising material from the management literature and the IT literature. Three different streams of literature, namely IT development, strategic IT, and IT outsourcing, and reported examples of strategic IT system development outsourcing project failure are examined. Based on the risks in the literature and using IT outsourcing stages as a basis, a risk framework is developed and tested in a preliminary case study. The case study investigates the development of a strategic system jointly developed by an in-house IT team and outsourcing vendors in Australia. The risk framework developed and tested here will assist clients to focus their attention on risks that can lead to failure of the outsourced strategic IT system developments.

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