Process Documentation, Operational Alignment, And Flexibility in IT Outsourcing Relationships : A Knowledge-Based Perspective

Abstract

What is the impact of process documentation on the relationship between operational alignment and IT provider flexibility in IT outsourcing relationships? Drawing on a sample of application management outsourcing relationships from the German banking industry, we analyze the connections between interorganizational alignment of IT and business domains and IT provider flexibility. Results show that provider’s tacit knowledge about the client’s business domain is a strong enabler of flexibility on the provider side. If the client’s business processes are poorly documented, tacit knowledge is also the main element that fosters trust, acceptance, and respect (the cognitive dimension of operational alignment) on the client side. However, when extended up to date business process documentation is available, tacit knowledge, while still enabling flexibility, becomes irrelevant for fostering cognitive linkages between client and provider. Instead, IT provider flexibility becomes the main driver for the cognitive dimension of operational alignment.

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