Information Technology sourcing decision framework: the case of Kenya Revenue Authority

Abstract

In recent years public organizations have turned to outsourcing Information Technology (IT) related service operations, as a strategic option aimed at organizational growth and attainment of its goals. Firms undertake IT outsourcing in an attempt to lower costs, put more focus on their core business and improve quality of IT services. A great challenge for most firms lies in expressing IT initiatives in value-for-money and convincing the business that the most cost-effective solution is being sought. Information technology managers have acknowledged that process frameworks are critical determinants of successful outsourcing initiatives. KRA plans to upgrade ICT to facilitate achievement of international best practice, raise performance standards and reduce operational costs. To achieve these goals, KRA needs to assess its internal technical capacity vis-a-vis outsourcing some of the IT services and make decision on the most cost effective IT sourcing strategy. A number of frameworks exist that attempt to explain various aspects of the outsourcing process. The different aspects range from making the outsourcing decision, implementing the outsourcing decision and the subsequent monitoring and management of the outsourcing initiative. The main objective of this research was to propose an IT sourcing decision framework that would assist decision makers form a basis for their IT sourcing strategy. An in-depth research into literature, articles and journals on IT sourcing was done to establish the various aspects of outsourcing. Analysis of various available frameworks that explain the aspects of IT sourcing decision making process with their strengths and weaknesses is also performed. Online questionnaires administered to middle and senior level managers at KRA were used to establish how IT sourcing decisions are currently managed. The various aspects of IT sourcing decision making were established as why outsource, what to outsource and how to outsource. From the findings, it was also established that KRA practices selective sourcing where some activities are performed in-house while others are outsourced. It was also established that there was no clear way of measuring performance of outsourcing initiatives. Based on these findings, an Information Technology outsourcing decision framework was developed and validated.