The call for new types of collaboration in outsourcing saw the development of the enterprise partnership model by Xchanging in 2001. The case looks at the history of one such partnership with BAE Systems. History shows why the model was attractive to BAE Systems against several other models. In Part 1 of the case, we look at and ask students to assess the in-house, fee-for-service outsourcing and management consultancy options for transforming HR through shared services. In Part 2, the case details the distinctive features of a joint-venture model that was eventually adopted and of the supplier competencies needed. We follow the relationship through the phases of preparation, realignment, streamlining, and continuous improvement, initially up to 2003. Students are asked to assess the model, progress, and what the future holds. In the third part of the case, we follow subsequent developments, including the change in the nature of outsourcing with BAE Systems from March 2007, the launch of Xchanging on the stock market in April 2007, its continued expansion, and its troubled history from 2010 to 2012. The case gives insight into the conduct of a distinctly different form of outsourcing, into how the client and the supplier deal with outsourcing over a number of years, and how a supplier navigates through a highly dynamic 21st century global environment while trying to expand its market services and revenue growth.

As the outsourcing market has matured over the past 20 years, clients and suppliers have begun to examine how these complex relationships can not only achieve cost savings, but also enable innovation in today's dynamic business environment. This article presents four case studies of large-scale information technology outsourcing relationships that take equal measure of the clients and suppliers. It develops a model of innovation within outsourcing relationships consisting of nine key enablers for achieving innovation. The article then links the key enablers to three levels of innovation that were identified within the case studies. The model provides insight into how executives within outsourcing relationships can move from a cost management focus to a focus on innovation and (ultimately) business value for the client and supplier.

This is an MIT Sloan Management Review article. In an attempt to increase both efficiency and service quality, more and more companies are outsourcing to third-party suppliers some key business processes, such as human resources, information technology, and procurement. The universe of potential suppliers is diverse and growing, made up of locally based specialists, offshore providers with comparatively low labor costs, and global suppliers who are able to apply sophisticated management techniques and technology. The challenge for clients is to understand their own requirements and to identify providers whose capabilities and objectives are best aligned with their particular needs. Draws on extensive research to identify three potentially critical areas of supplier competency: delivery competency, transformation competency, and relationship competency. By benchmarking supplier capabilities against its strategic and operational intent, a company can work to establish relationships that support its business objectives.

This is an MIT Sloan Management Review article. Today's vast array of Web applications for supply chain integration, sales force automation, work group collaboration, and the sale of everything from equities to automobiles makes it perfectly clear that information technology has evolved beyond the role of mere infrastructure supporting business strategy. In more and more industries today, IT is the business strategy. Unfortunately, many CEOs are ill-equipped to manage effectively in the Information Age. The problem has less to do with IT literacy than with a range of behaviors and attitudes that cause such CEOs to shirk their IT responsibilities. By their actions, many CEOs send negative signals about IT's role to other leaders in their organization, who then repeat the behavior. Companies with such leaders frequently fail to reap business advantage from information technology. The authors describe seven types of CEOs and their behaviors and attitudes toward IT and explain why all but one are decidedly unfit to lead companies in the Information Age. Only the "believer CEO" is ready to play a constructive role in his or her company's use of IT. Believers understand that IT enables strategic advantage and demonstrate such beliefs in their daily actions. Believers are involved in IT decision making and are proactive in addressing IT problems and opportunities. They seek advice from a variety of sources, study the IT strategies of competitors, and set examples for others managers in their company to follow. Using examples, the authors explain how believer CEOs play a critical role in their corporate IT strategies, how they craft IT-savvy organizational cultures, and how these actions benefit their businesses. The authors prescribe a variety of methods for leaders to address their shortcomings and master the techniques of believers.

Executives pondering which parts of their information technology (IT) function should be outsourced and which should be kept in-house usually ask themselves, Does the particular IT operation provide a strategic advantage or is it a commodity that doesn't differentiate us from our competitors? If it is a strategic service, they keep it in-house. If it is a commodity--especially one that a supplier claims it can provide inexpensively--they outsource it. If only the decision were that simple. Between 1991 and 1993, the authors studied 40 U.S. and European companies that had grappled with the issue of outsourcing IT. Their conclusion: The strategic-versus-commodity approach usually led to disappointments. Instead, the authors argue, a company's overarching objective should be to maximize flexibility and control so that it can pursue different options as it learns more or as its circumstances change. The way to accomplish that goal is to maximize competition. Managers should not make a onetime decision whether to outsource. They should create an environment in which potential suppliers--external as well as internal--are constantly battling to provide IT services.

This is an MIT Sloan Management Review article. Chief information officers have the difficult job of running a function that uses a lot of resources but offers little measurable evidence of its value. To make the information systems department an asset to their companies--and to keep their jobs--CIOs should think of their work as adding value in certain key areas. Accordingly, CEOs can take a number of steps to aid a CIO's efforts. Based on studies of information systems leaders in 60 organizations, this article presents a portrait of successful CIOs and the CEOs who support them.