Organizational decision-making in purchasing outsourcing services

Abstract

Objectives of the Study:

Master's Thesis studies outsourcing services' purchase decisions at an organizational decision-making point of view in the context of financial management and accounting outsourcing in Finnish municipalities. Aim is to answer following research questions: (1) What kind of organizational decision-making process is behind the purchase decision related to financial management outsourcing service in Finnish municipalities? (2) What decision criteria impact the purchase decision related to financial management outsourcing services in the Finnish municipalities?

Academic background and methodology:

Research is conducted as a multi-case study. The organization decision-making process is examined by using Simon's (1960) model organizational decision-making and Dibbern et al.'s (2004) adaptation of it. The decision criteria are examined by using Lacity et al.'s (2011, 2010) models for business process and IT outsourcing decisions are outcomes.

Findings and conclusions:

Organizational decision-making in Finnish municipalities consists of five phases: (1) Initiation, (2) preparation, (3) decision-making, (4) the service of decision and implementation. Organizational decision-making in the outsourcing context consists on three decision points: (1) Decision on outsourcing or insourcing, (2) decision on an outsourcing mode and (3) decision on an outsourcing service provider. Decisions were made at the same time and the decision points were dependent on each other. IT and business process outsourcing purchase decisions were dependent on each other. Persons involved in the initiation and preparation phases affected the final decision. Most important decision criteria are cost reductions either in the financial management operations or in the whole municipality through improved resource planning and control, scalability, partnership view, access to skills and expertise, rapid delivery to enable more real-time reporting, technical reasons and outsourcing services' quality and reliability.