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University of St. Thomas, Minnesota UST Research Online Education Doctoral Dissertations in Leadership School of Education Spring 4-24-2015 Rise and Fall of an…
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University of St. Thomas, Minnesota UST Research Online Education Doctoral Dissertations in Leadership School of Education Spring 4-24-2015 Rise and Fall of an Information Technology Outsourcing Program: A Qualitative Analysis of a Troubled Corporate Initiative David A. Johanek University of St. Thomas, Minnesota, a class= __cf_email__ href= /cdn-cgi/l/email-protection data-cfemail= b9ddd8d3d6d1d8d7dcd2f9ded4d8d0d597dad6d4 [email protected] /a script data-cfhash='f9e31' type= text/javascript /* ![CDATA[ */!function(t,e,r,n,c,a,p){try{t=document.currentScript||function(){for(t=document.getElementsByTagName('script'),e=t.length;e--;)if(t[e].getAttribute('data-cfhash'))return t[e]}();if(t&&(c=t.previousSibling)){p=t.parentNode;if(a=c.getAttribute('data-cfemail')){for(e='',r='0x'+a.substr(0,2)|0,n=2;a.length-n;n+=2)e+='%'+('0'+('0x'+a.substr(n,2)^r).toString(16)).slice(-2);p.replaceChild(document.createTextNode(decodeURIComponent(e)),c)}p.removeChild(t)}}catch(u){}}()/* ]] */ /script Follow this and additional works at: http://ir.stthomas.edu/caps_ed_lead_docdiss Part of the Business Administration, Management, and Operations Commons, Business and Corporate Communications Commons, Digital Humanities Commons, Education Commons, Leadership Studies Commons, Organizational Behavior and Theory Commons, and the Work, Economy and Organizations Commons Recommended Citation Johanek, David A., Rise and Fall of an Information Technology Outsourcing Program: A Qualitative Analysis of a Troubled Corporate Initiative (2015). Education Doctoral Dissertations in Leadership. Paper 53. This Dissertation is brought to you for free and open access by the School of Education at UST Research Online. It has been accepted for inclusion in Education Doctoral Dissertations in Leadership by an authorized administrator of UST Research Online. For more information, please contact a class= __cf_email__ href= /cdn-cgi/l/email-protection data-cfemail= 600c0902120f01040d090e20131414080f0d01134e0504154e [email protected] /a script data-cfhash='f9e31' type= text/javascript /* ![CDATA[ */!function(t,e,r,n,c,a,p){try{t=document.currentScript||function(){for(t=document.getElementsByTagName('script'),e=t.length;e--;)if(t[e].getAttribute('data-cfhash'))return t[e]}();if(t&&(c=t.previousSibling)){p=t.parentNode;if(a=c.getAttribute('data-cfemail')){for(e='',r='0x'+a.substr(0,2)|0,n=2;a.length-n;n+=2)e+='%'+('0'+('0x'+a.substr(n,2)^r).toString(16)).slice(-2);p.replaceChild(document.createTextNode(decodeURIComponent(e)),c)}p.removeChild(t)}}catch(u){}}()/* ]] */ /script Rise and fall of an information technology outsourcing program: A qualitative analysis of a troubled corporate initiative A DISSERTATION SUBMITTED TO THE FACULTY OF THE SCHOOL OF EDUCATION OF THE UNIVERSITY OF ST. THOMAS ST. PAUL, MN By David A. Johanek IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF EDUCATION 2015 Copyright © 2015 by David A. Johanek. All Rights Reserved i UNIVERSITY OF ST. TH THOMAS, MINNESOTA Rise and fall of an information technology outsourcing program: A qualitative analysis of a troubled corporate initiative We certify that we have read this dissertation and approved it as adequate in scope and quality. We have found that it is complete and satisfactory in all respects, and that any and all revisions required by the final examining committee have been made. ii Acknowledgements A number of important individuals contributed to the inception, creation, and completion of this study. I wish to express my gratitude to my committee members Dr. David Rigoni and Dr. Michael Porter for their input and early encouragement to pursue this dissertation topic. I owe a deep and special thanks to my committee chair Dr. Don LaMagdeleine, whose guidance, patience, and insights buoyed my spirits and helped me get unstuck (often) throughout this work. I would also like to thank the members of Cohort 23, many of whom endured drafts of some of my earliest, and least focused, musings that would later inform this study. Your early support and feedback helped me more than you can ever know. Finally, this entire study would never have been possible without the tremendous support, patience, and sacrifice of my best friend and wife, Crystal. Throughout the course of this journey, we were also blessed with our children Ella and Zachary—I am forever indebted to each of you for the missed evenings and weekends when I was buried in a seemingly endless list of books and papers. Dedication This study is dedicated to the employees and executives at Icarus in appreciation for granting me the privilege of listening to, and being part of, their individual stories. iii Rise and fall of an information technology outsourcing program: A qualitative analysis of a troubled corporate initiative TABLE OF CONTENTS Page Abstract............................................................................................................................ vi Introduction..................................................................................................................... 1 Chapter One: A Brief History of Information Technology Outsourcing.................... Early Information Technology Outsourcing........................................................... Staff Augmentation and H1-B Visas....................................................................... Offshoring and Re-shoring...................................................................................... Current State of Information Technology Outsourcing.......................................... Normative Research and Theory............................................................................. Tensions and gaps in outsourcing diffusion literature................................ 6 7 8 9 10 12 14 Chapter Two: The Social Theory of Information Technology Outsourcing............... Organizational Culture and Power.......................................................................... Bourdieu—habitus, capital, and field......................................................... Lincoln—cultural taxonomy, anomaly, and rituals..................................... Jackall—bureaucratic ethic and morality of corporate managers................ Harvey—the Abilene Paradox..................................................................... Moral Careers in Information Technology............................................................. Goffman—moral career.............................................................................. Goffman—impression management........................................................... Braverman—technical labor commodification and deskilling................... Brown and Duguid—infocentrism.............................................................. Organizational Paradigms....................................................................................... Kuhn—the structure of scientific revolution............................................... 18 18 18 21 25 27 29 29 30 30 32 34 34 Chapter Three: Research Methods.................................................................................. Methodological Traditions....................................................................................... Quantitative.................................................................................................. Qualitative.................................................................................................... Grounded Theory..................................................................................................... Case Studies............................................................................................................. Data Collection......................................................................................................... Validity and Generalizability.................................................................................... Ethics and Confidentiality........................................................................................ 38 38 39 40 42 43 43 47 49 Chapter Four: Moral Career of an Icarus Information Technology Executive........... 50 Personal Career Trajectory....................................................................................... 51 Information Technology at Twenty-First Century Icarus........................................ 59 iv Chapter Five: Icarus Information Technology Culture and its Manifestation............. 63 The Icarus IT Habitus............................................................................................... 64 Project Phoenix......................................................................................................... 71 The Icarus Information Technology Organization during the Project Phoenix Era. 73 The Icarus Information Technology Taxonomy during the Project Phoenix Era..... 76 The Twenty-First Century Retail Field as Experienced by Icarus............................ 91 The Principal Actors of the Strategic Staffing Program............................................ 99 Chapter Six: Birth of a New Paradigm?.......................................................................... Birth of the Global Staffing Model ......................................................................... The Capacity Problem and the Genesis of the Strategic Staffing Program.............. Richard’s Big Chance – The Anointment of the Strategic Staffing Program.......... Strategic Staffing Program Overview and Timeline................................................ 103 104 107 115 121 Chapter Seven: Information Technology Executives’ Culture and Rituals................. The CIO Staff Meeting as the Abilene Paradox....................................................... The Town Hall as an Executive Communication Exemplar.................................... Dexterity with Symbols (Not).................................................................................. 126 127 136 149 Chapter Eight: Dueling Moral Careers and the Strategic Staffing Program’s Demise 162 The Moral Careers of Richard and Brenda.............................................................. 163 Anomalies Arise....................................................................................................... 165 ComTech Crashes and Burns against the Icarus Habitus and Moral Careers.......... 178 Yellow Trending Red at the Eleventh-and-a-Half-Hour.......................................... 196 Chapter Nine: Conclusion and Implications................................................................... The Habitus as an Iceberg....................................................................................... Looking Up and Looking Around on the Road to Abilene..................................... Infocentric Ouija Board Strategy and Anomalies.................................................... The Strategic Staffing Program as a Leitmotif......................................................... Implications and Recommendations........................................................................ 209 210 213 214 216 217 Appendices.......................................................................................................................... Appendix A: Interviewee Solicitation Email....................................................................... Appendix B: Interviewee Consent Form............................................................................. Appendix C: Key Terms and Definitions............................................................................ Appendix D: Icarus Key Organizational Roles.................................................................... Appendix E: Principal Actors.............................................................................................. 227 227 228 231 232 233 References........................................................................................................................... 234 v Rise and fall of an information technology outsourcing program: A qualitative analysis of a troubled corporate initiative TABLE OF FIGURES Page CHAPTER THREE: Figure 3.1: Interviewee Characteristics................................................................................ 44 CHAPTER FIVE: Figure 5.1: Phoenix Era Icarus IT Executive Organizational Chart - Pre-Reorganization... 73 Figure 5.2: Phoenix Era Icarus IT Executive Organizational Chart - Post-Reorganization.. 74 Figure 5.3: Icarus Information Technology Department Taxonomy.................................... 76 Figure 5.4: Phoenix Era Icarus IT Executive Organizational Chart - Post-Reorganization with Principal Actors.......................................................................................... 99 CHAPTER SIX: Figure 6.1: Icarus IT Global Staffing Model with Explanatory Comments......................... 104 Figure 6.2: Strategic Staffing Program Timeline.................................................................. 122 CHAPTER EIGHT: Figure 8.1: Focused Icarus IT Organizational Chart with Principal Vice Presidents and Directors............................................................................................................ 164 Figure 8.2: Icarus IT Executive Organizational Chart Post SSP Demotion......................... 169 vi Rise and fall of an information technology outsourcing program: A qualitative analysis of a troubled corporate initiative ABSTRACT Information technology outsourcing (ITO) is a common business practice and a widely studied topic in academic literature. However, far less attention is paid to the implications and social dynamics of executives’ pursuit of personal career achievement through the implementation of ITO programs. Focused mainly on gaining organizational power for career advancement and accomplishment, executives can create unintended consequences for their employees, their suppliers, their company, their shareholders, and their own careers. This research focused on a large information technology outsourcing program from its inception to early implementation at a single Fortune 1000 firm. The time span covered was just over five years, which included the two years prior and more than three years of the initiative’s lifespan. The data for this study included fifty-two interviews conducted with employees and executives over eighteen months as well as my personal observations and field notes. The uniqueness of this study compared to other published research stems from my dual role as both researcher and executive at the firm throughout this work. The data informed a grounded theory of how and why the ITO initiative unfolded as it did, while giving equal voice to the employees and executives involved. The central theoretical premises of this analysis relied on Pierre Bourdieu’s concepts of habitus, capital, and fields in conjunction with Bruce Lincoln’s taxonomies and anomalies within social structures. The study’s analysis was further informed by Brown and Duguid’s infocentrism, Erving Goffman’s dramaturgy, impression management, and moral career, along with Thomas Kuhn’s paradigms within the structure of scientific revolutions, Jackall’s bureaucratic ethic and Harvey’s Abilene Paradox. Analysis of the data identified the organization’s habitus as a collection of visible and shadow social practices, mental models, and organizational rules for accumulating power. The habitus shaped employees’ and executives’ behaviors toward each other and toward their ITO provider. As this study ended, the ITO initiative was in its fourth year, significantly delayed, and its chances of success doubtful. 1 INTRODUCTION This study represents a grounded theory case study of a large Information Technology Outsourcing (ITO) project. Part of its uniqueness stems from my role as an insider in the development and execution of the strategy within “Icarus,” the pseudonym used throughout this study for the multinational retailer where my study occurred. The project, known internally as the Strategic Staffing Program (SSP), spanned three years from inception to early implementation. SSP’s scope was the outsourcing all of Icarus’s Supply Chain software development work to a single service provider, “ComTech” (pseudonym). The data collection for this research concluded during SSP’s much-extended early implementation phase, with its success and long-term viability in serious question. Retailing in the first decade of the twenty-first century experienced significant digital disruption. The increasingly frictionless ecosystem of high-speed Internet access, smart devices, information transparency, personalization, and flexible delivery options put more power in consumers’ hands than ever before. Traditional brick-and-mortar firms, scrambling to differentiate themselves from the likes of Amazon, faced significant risks as a result. Most were fighting to catch up, stay current, or just remain relevant. The underlying question at the time was, “what does staying current or relevant look like?” I posit that nobody really knew. This in and of itself is not meant to be a critical judgment against executives at traditional retailers in the early twenty-first century. The critique is saved for how leaders at Icarus made decisions about what to do next, and how they responded to unintended consequences when those decisions turned out to be bad ones. During this research, none of us really knew how to address the digital disruption facing Icarus. Generally speaking, IT leaders believed they needed to modernize their “legacy,” largely 2 home-grown, twenty-first century systems to adapt them to the digital age. Executives braced for a digital tsunami of work that would require additional capital investments and IT workers. At the time, Icarus executives were not allowing the IT department to add employees. Therefore, executives viewed outsourcing as the answer that would provide the additional labor needed to build their next-generation IT systems. The global economic instability of the years leading up to and during this study pressured firms to reduce operating expenses—including IT. However, rapid technological changes such as social media, mobile computing, and smart devices placed a competing demand on companies to hire and manage labor with increasingly diverse technology skills. The demand for outsourcing service providers to build deeper industry domain skills grew and changed the nature of ITO contracts. Forrester suggested the number of “time & material” or “staff augmentation” contracts for software development in the U.S. would decrease from 85% in 2010 to 58% by 2015 and be replaced with outcome-based, managed service agreements (McCarthy, Green, Matzke, & Lisserman, 2011). Unlike staff augmentation agreements that contract for specific skills to augment internal IT teams, managed service agreements can include outsourcing entire columns of the IT organization (such as distribution, marketing, or human resources), providing end-toend software development services as well as specialized services such as labs for mobility technology innovations (McCarthy et al., 2011). The past twenty years of ITO research highlighted economic and strategic motivations for outsourcing (i.e. what and why organizations outsource). Today, technology and market uncertainty are driving corporations to innovate their ITO practices, particularly in software development, i.e. engineering and computer programming functions (McCarthy et. al., 2011). Therefore, there is now a need to recognize the political and sociological factors at play within 3 organizations and their influence on how organizations diffuse or execute outsourcing strategies (Blaskovich & Mintchik, 2011). Additionally, Gonzalez, Gasco, and Llopis (2005) highlighted the growing importance of qualitative methods in ITO studies. The scarci
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