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Journal of Advanced Management Science Vol. 4, No. 6, November 2016Does the ITIL Service Quality FrameworkImprove Outsourcing Relationship Outcomes?Moahmmed AlojailDepartment of Information Systems, King Faisal University, Al Hassa, Saudi ArabiaEmail: [email protected] CorbittRMIT University, Melbourne, AustraliaEmail: [email protected] This is demonstrated by the increasing numbersof publications [4] and [5]. Table I shows the main topicsthat have been researched in the IT outsourcing literature.Abstract—More and more Australian firms are outsourcingtheir IT – indeed, outsourcing of at least some services is thedominant pattern. Yet managing outsourced IT is difficultand outcomes are uncertain. It has been suggested thatfirms that adopt a formal quality framework (such as ITIL)will have better outcomes and achieve greater cost savingsfrom their outsourcing. In a survey of 140 users, when thehypothesis that ITIL would lead to better outsourcingoutcomes was tested, the data indicated that while ITIL useled to better service level agreements, these did not lead tobetter downstream outcomes. On average, those that hadimplemented ITIL, and those that had not, achieved similaroutsourcing outcomes. It appears that the focus of ITIL onwithin-firm service delivery makes it less helpful as astrategy for managing externally provided IT services. TABLE I.TopicBenefits/RisksArrangement typesDeterminants of IT outsourcingDevelopment of a good contractSuccess factorsOutsourcing relationshipINTRODUCTIONThe practice of outsourcing IT services is not new. Ithas been used by firms since the 1960s [1]. Since thattime, outsourcing has experienced a number of changes[2]. IT outsourcing (the use of external suppliers toprovide IT services) has been formally defined in severalways. Many of the definitions provided in the literatureonly apply to services that were performed in-house thenturned over to someone else (i.e. a vendor). For example,[3] defined IT outsourcing as ‘a process whereby anorganisation decides to contract-out or sell the firm’s ITassets, people and/or activities to a third party supplier,who in exchange provides and manages these assets andservices for an agreed fee over an agreed time period’.However, a large number of modern outsourcing dealsinvolve services that were never in-house to start with, sothese definitions lack precision. Therefore, for this study,the authors have formally defined IT outsourcing as “acontractual relationship where an external organisationtakes on responsibility for performing all or part of abusiness process or function, to agreed performancecriteria at an agreed price”. Over the last two decades, IToutsourcing has become increasingly popular in ISManuscript received May 11, 2015; revised July 13, 2015. 2016 Journal of Advanced Management Sciencedoi: 10.18178/joams.4.6.452-456Authors (Examples)[6]-[8][9], [10][11], [12][13], [14][15]-[17][18]-[20]Organisations generally adopt IT outsourcing in orderto achieve benefits such as cost saving, access toexpertise or to attain better quality [12] and [17].However, the last decade has seen a generalreformulation, within the business literature, of internalsupport functions as “service providers”. As part of thistrend, issues related to IT service management havereceived increasing attention in the Information Systemsliterature [21] and [22]. [23] observed that an ITdepartment must shift attention from technologicalinfrastructure to the IT services it provides. On the basisof several case studies, [22] echoed this, identifying anumber of key IT service management problems withinIT departments.[21] have observed that in order to achieve costsavings, many organisations have invested in some formof Information Technology Service Management (ITSM)framework. Corresponding to the rise in focus on ITservice management, organisations have begun adoptinga range of service-management frameworks in order tomanage their services. Several frameworks exist, such asControl Objectives for Information and relatedTechnology (COBIT), ISO 20000 and the InformationTechnology Infrastructure Library (ITIL). In Australia,ITIL is the most frequently used framework [24].Over the past two decades, ITIL has been modified toensure a more consolidated and straightforwardframework [25]. ITIL has gone through a number ofrevisions-the most recent revision being ITIL 2011. TableII shows the development of ITIL. The main differencebetween ITIL v2, ITIL v3 and ITIL 2011 is in the serviceIndex Terms—IT outsourcing, IT outsourcing relationship,ITIL, service level agreementI.THE MAIN TOPICS IN THE IT OUTSOURCING LITERATURE452

Journal of Advanced Management Science Vol. 4, No. 6, November 2016life cycle. Table III shows the difference between ITIL v2,ITIL v3 and ITIL 2011.TABLE II. ITIL FRAMEWORK HISTORYFrameworkYearsITILITIL v2ITIL v3ITIL 20111989-1990s2000-20072007- 20112011-nowNo of books incorporated inthe framework Books42955TABLE III. DIFFERENT BETWEEN ITIL V2, ITIL V3 AND ITIL 2011ITIL v2Service nsManagementPlanning ementITIL BusinessPerspectiveITIL v3Service StrategyITIL 2011Service StrategyService DesignService DesignService TransitionService TransitionService OperationService OperationContinual ServiceImprovementContinual ServiceImprovementII.RESEARCH METHODA. Descriptive SurveyThe researchers obtained an IT Australian managerslist with 2000 records. The participants were contactedover the period from May 1, 2012 to June 15, 2012. Theresearchers used Qualtrics software (www.qualtrics.com)in order to send the invitations. As a result, in total, 239questionnaires were received representing a response rateof 11.95 %. However, only 140 responses were valid.45 % of firms used some formal system such as COBIT,ISO 2000 and ISO/IEC 17799, of which the largemajority, 83 participants, used ITIL. The unit of analysiswas outsourcing arrangement as almost all firms (70 %)engaged in some form of IT outsourcing (asked to focuson most recent outsourcing arrangement).Based on the preliminary focus group and literaturefindings, the researcher tested a set of hypotheses bydeveloping an online survey. Both [29] and [30]suggested that hypotheses can be tested by using statisticsand statistical analysis. Below shows the hypotheses usedin this research: H1a: ITIL-usage will positively influence thequality of SLA practices H1b: the quality of SLA practices will positivelyinfluence Technical Service Quality H2a: ITIL-usage will positively influencecommunication quality H2b: communication quality will positivelyinfluence technical service quality. H3 a: ITIL will positively influence knowledgesharing H3b: knowledge sharing (KS) will positivelyinfluence technical service quality (TSQ) H4: TSQ will positively influence benefits(economic, strategic and technological). H5: benefits will positively influence satisfaction. H6a: satisfaction will positively influence trust H6b: satisfaction will positively influencecommitmentSame principals, mostly editorial changes,slight content changes. Remarkable change wasadded the Business relationship managementprocess under Service Transition volume.The current version, ITIL 2011, was developed in 2011and contains five core texts (or books), namely servicestrategy, service design, service transition, serviceoperation and continual service improvement. Eachoutlines its own purpose, process; activity and role.The ITIL framework focuses on different strategies forachieving high quality service, including a range ofrecommended techniques, methods, processes, activitiesand measurements. These aspects are often adopted byservice providers to ensure better quality IT servicedelivery and, as a result, achieve greater customers’satisfaction. Also customers can adopt some features andmechanisms of ITIL in order to better understand theirresponsibilities and attain their expectations.[24] observed that ‘Australia is at the forefront of ITILadoption’. In the same vein, the study by [21] found thatfrom 204 responses, 56% had adopted ITIL V2 while44 % had adopted ITIL v3. IT service management is anemerging topic for academic research. Therefore it is notsurprising that there is, as yet, little academic research onthe ITIL adoption. Most studies to date have concentratedon likely benefits and reporting descriptive statistics [23]and [24].Few studies have, to date, examined ITILimplementation within an environment where much ofthe IT is outsourced, even though this is increasingly thesituation in modern business. Some researchers proposedthat ITIL adoption would lead to an improved IToutsourcing relationship. Based on referencing a 2004Enterprise Management Associates study of 48 ITmanagers regarding the ITIL adoption, [26] argued thatITIL implementation could benefit IT outsourcingrelationships in many ways, such as aligning businessprocess requirements with the outsourcing relationship 2016 Journal of Advanced Management Sciencestructure. Similarly, on the basis of case studyobservations, [27] concurred with [26]’s argument thatthe adoption of ITIL in an outsourcing scenario couldbring substantial benefits to both parties. On the basis of acase study, [28] suggested a framework based on ITIL v3to assist customers and vendors to manage theiroutsourcing projects. These cases, however, need to besupported with empirical research, which this studyintends to provide.ITIL was not designed to manage extensive IToutsourcing but has been adapted to do so, similar to theuse of other governance standards like those from ISOand COBIT. Hence, the post-implementation impact ofITIL on IT outsourcing relationships is still underresearched. There is a lack of research that theorises, tests,validates and evaluates the effect of ITIL on the IToutsourcing relationship. To address this gap, this studyattempts to discover how ITIL implementation can assistthe IT outsourcing relationship.453

Journal of Advanced Management Science Vol. 4, No. 6, November 2016The model (Fig. 1) tested includes nine constructs(ITIL-usage, SLA quality, Communication Quality,Knowledge Sharing, Technical Service Quality,Satisfaction, Benefits, Commitment and Trust). Eachconstruct had three items as a minimum.Figure 1. The preliminary research model with Hypotheses.An eight-point Likert scale was used to measure allitems of the survey. The reason for selecting the largescale was to ensure more reliable scores [31]. As thequestions covered a wide range of IT outsourcingrelationship and service quality related questions, therewas always the chance that the respondent could notanswer questions that did not apply to their organisation.Therefore, the ‘not applicable’ option was added to eachquestion to minimise the risk of obtaining inaccurateresponses from participants [32]. The survey instrumentwas designed to be anonymous and all data collected wasaggregated to avoid any possibility of identification. Theresearcher provided participants with the key definitionsof concepts used in the survey. These includedoutsourcing, vendor, ITIL, service, service quality, yourorganization and outsourcing arrangement.III.However, when using a range of more complexstatistical methods such as AMOS and MANOVA, theresults showed that the usage of ITIL had a small impacton SLA Quality and accounted for only 4.8% of thevariation. While the results indicated that SLA Qualityhad not much effect on other outcomes such as TechnicalService Quality, Cost Savings and Commitment,Communication Quality had a large standardised effecton Technical Service Quality construct (β .72, p 0.001), accounting for 67% of its variance (R² .67).Moreover, the regression path from the ITIL-usageconstruct to Communication Quality was statistically nodifferent from zero which means there is no impact ofITIL usage on Communication Quality.The survey research suggests that such outcomes canbe obtained independent of formal ITIL implementationif the practices underlying the ITIL standards are adopted.There are other issues that emerged from the survey: SLA Quality had only a small indirect effect onCommitment. This may be because the importanceof good SLAs to outsourcing has been highlightedfor over 20 years in the literature, leading manynon-ITIL users, along with ITIL users, to creategood SLAs. The regression path from ITIL-usage toCommunication Quality was statistically nodifferent from zero (0.04, n.s.). The regression path from the ITIL-usage toKnowledge Sharing was statistically no differentfrom zero (0.05, n.s.). The regression path from the ITIL-usage toTechnical Service Quality was statistically nodifferent from zero (0.02, n.s.). The regression path from the ITIL-usage to CostSavings was statistically no different from zero(0.03, n.s.). The regression path from the ITIL-usage toCommitment was statistically no different fromzero (0.05, n.s.).The survey of both users and non-users showed thatformal adoption of ITIL had little impact on the successFINDING AND DISCUSSIONThe survey was developed based on the findings fromboth a preliminary focus group and from pertinentliterature. The preliminary focus group informantssuggested that ITIL’s main impact on outsourcingrelationship quality is via service level agreementpractices, and via mechanisms that are designed toimprove communication quality and knowledge sharingwere supported in the survey findings.TABLE IV. THE AVERAGE POSITIVE/NEGATIVE OUTCOMESConstruct (Average)SLA QualityCommunication QualityKnowledge SharingTechnical Service QualitySatisfactionTrustCommitmentCost SavingsPositive %78.378.677.271.471.47077.257.8Negative %21.721.422.828.628.63022.842.2The survey results also reported that the majority ofparticipants scored positive outcomes for each construct.Table IV describes the average positive/ negativeoutcomes by construct. 2016 Journal of Advanced Management Science454

Journal of Advanced Management Science Vol. 4, No. 6, November 2016[5]of IT outsourcing arrangements. Previous research [3],[18] and [20]- suggests that the reasons for successful IToutsourcing include: partnership quality, service quality,contract management, communication, trust, personalbond, commitment, conflict resolution, flexibility,participation, and information sharing. This researchabove does not consider ITIL and, therefore, suggests thatfactors other than ITIL could also be responsible for theeffects on IT outsourcing attributed to ITIL adoption bythe IT users in the focus groups.The SEM analysis in this research provided evidencethat ITIL per se has no impact on the success ofoutsourcing arrangements, though the processes that areemphasised by ITIL certainly did. The quantitative dataindicated that both ITIL users and non-ITIL users whoemployed good management strategies achieved goodoutcomes, and that non ITIL users gained outsourcingbenefits without having ITIL in y in the surveyed group, many firms that did nothave ITIL in place achieved good outcomes, as did thoseusing ITIL. So ITIL is not necessary for effectivemanagement of outsourced arrangements, though there isevidence that the principles behind ITIL (particularlyencouraging good communication between provider andclient) certainly do have a positive effect.One explanation is that good practices, after 20 yearsof published literature, have now been widelydisseminated in the Australian IT community (at least inthe 73 % of firms reporting good practices).Another explanation might be that ITIL’s focus oninternal delivery means that it has only limited things tosay about outsourcing arrangements. ITIL framework [33]does acknowledge that IT is recently sometimesoutsourced but the focus on outsourcing arrangement isincidental rather than core.So, regardless of which explanation is correct, if ITILis going to be used in the ways suggested in the literature,it will need to more explicitly address management ofoutsourced IT services. These are fast becoming the norm.If we treated packaged software as “outsourced” (in thatthe development of the software was carried outexternally) the dominant form of delivery is fastbecoming outsourced. As it stands now, these findings donot encourage firms that have not yet adopted ITIL toadopt it, if they are relying, to a large extent, on externalproviders.[2][3][4]M. C. Lacity and R. Hirschheim, “The information systemsoutsourcing bandwagon,” Sloan Management Review, vol. 35, pp.73-86, 1993.J. N. Lee, M. Q. Huynh, R. C. W. Kwok, and S. M. Pi, “IToutsourcing evolution---: Past, present, and future,” Commun.ACM, vol. 46, pp. 84-89, May 2003.T. 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Journal of Advanced Management Science Vol. 4, No. 6, November world.com/newsletters/asp/2006/0102out1.html?page 1S. C. Cheng. (2006). Risk management of IT Outsourcing itebm.business.illinois.edu/TWC%20Class/Project 20Cheng.pdfR. Mobarhan, A. A. Rahman, and M. Majidi, "Outsourcingmanagement framework based on ITIL v3 framework," in Proc.Information Technology in Asia 7th International Conference on(CITA), 12-13 July. 1-5, 2011.B. Kaplan and D. Duchon, "Combining qualitative andquantitative methods in information systems research: A casestudy," MIS Quarterly, vol. 12, no. 4, pp. 571-586, 1988.W. L. Neuman, Social Research Methods: Qualitative andQuantitative Approaches, Allyn & Bacon, Boston, 2011, ch. 7.C. C. Preston and A. M. Colman, "Optimal number of responsecategories in rating scales: Reliability, validity, discriminatingpower, and respondent preferences," Acta Psychologica, 104, pp1-15, 2000A. Barua, P. Konana, and A. B. Whinston, "An empiricalinvestigation of net-enabled business value," MinformationSystems Quarterly, vol. 28, no. 4, pp. 585-620, 2004.OGC. OGC Best Practice Portfolio. (2007). [Online]. Office lID 175&sID 139 2016 Journal of Advanced Management ScienceMohammed A. Alojail, has a master and PhDdegree in Information systems from Australia(University of Melbourne 2008 and RMITUniversity 2013), he is an Assistant Professorin at King Faisal University (KFU) in SaudiArabia, currently working as a Consultant atthe National Center for Assessment in HigherEducation, Riyadh, Saudi Arabia. He hasconsiderable experience in the field ofInformation systems. Dr. Alojail has writtenmany scholarly papers in the field of IS and IT outsourcing.Brian J. Corbitt, has a PhD degree in IT policyfrom Australia (Monash university 1995), he isan Emeritus Professor of Information Systems atCollege of Business in RMIT University,Australia. Professor Corbitt has significantexperience and international standing andrecognition in Information Systems, NationalInformation Policy, Health Informatics and elearning. He has published 10 books including 6on electronic trends. Professor Corbitt has also published over 150refereed scholarly papers and some 20 invited papers as a keynotespeaker on IT policy in different international contexts.456

Over the past two decades, ITIL has been modified to ensure a more consolidated and straightforward framework [25]. ITIL has gone through a number of revisions-the most recent revision being ITIL 2011. Table II shows the development of ITIL. The main difference between ITIL v2, ITIL v3 and ITIL 2011 is in the service . 452