Managing application software suppliers in information system development projects

Abstract

Information system development (ISD) projects have been associated with the "software crisis" for over three decades. A set of common "root causes" has often been cited in literature with corresponding "solutions". Yet the overall project success rate has remained low, resulting in a paradox of many solutions and little progress over the years. This study examines the management of application software acquisition from external suppliers in ISD projects. Three case studies are documented based on participant observation with complete membership roles. After within-case analyses highlighting issues in individual cases, crosscase analyses are conducted, first to identify a pattern of ISD project challenges and then to search for their explanations. Concepts from agency theory, contract theory and product development literature are used in the process of diagnosing root causes behind the observations. The proposed explanation is that the Traditional Systems Development Framework (TSDF), characterized by competitive-bidding-monopolized-development, underlies the identified root causes. Accordingly, competitive development is suggested as an alternative approach. Following the "Inference to the Best Explanation" (IBE) analytical strategy, the suggested approach is subject to two contrastive analyses, first with the prepackaged software development and then with the construction industry, to demonstrate that the suggestion is a "warranted inference". Further analogical analyses illustrate the feasibility of development competition for software product development. A Performance-Based Systems Development Framework (PBSDF) is outlined as a tentative implementation of the suggested competitive development approach for ISD projects supported by risk-sharing supplier contract and a relative product evaluation approach. A number of future research implications are described as a result of this study after summarizing the research contributions.