Information technology outsourcing (ITO) governance: an examination of the outsourcing management maturity model

Abstract

Given a lack of experience in outsourcing contractual management, firms involved in IT outsourcing (ITO) can encounter unexpectedly poor service quality improvement. As a guidance for better ITO activities, Raffoul (2002) introduced the outsourcing management maturity (OMM) model, a framework established to create effective vendor management structure, create measurable and enforceable service-level agreements (SLAs), implement formal processes, and drive vendors to improve service quality. This model was developed to enable outsourcing to be managed as an investment portfolio whereby cost is reduced, risks are mitigated, IT organization credibility is established, and outsourcing benefits are materialized in a timely manner. This paper questions if one or more aspects of this OMM model may be considered necessary success factors when applied in practice, particularly in the financial sector. This research, as part of a study on drivers for IT cost optimization and outsourcing, examines the elements of the OMM model in the context of several recent IT outsourcing contracts in the banking sector to see which of its elements are actively employed in successful contracts.

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