During the past few years, innovation has become a headline agenda item for many firms and for their CIOs. Can CIOs who have outsourced most of their information technology (IT) meet the challenge, or is outsourcing incompatible with innovation? Certainly, losing innovative capabilities is recognized as a potential risk of outsourcing in these environments. IT outsourcing is now twenty years old and many large organizations have a decade or more of experience in large-scale IT outsourcing relationships. For these firms, the success of their relationships is critical, since switching suppliers is extremely costly and painful, and a large-scale return to in-sourced alternatives is seen to be almost impossible. "Success" is a multi-dimensional concept: the most obvious goals are to achieve high-quality IT services at low levels of cost; but the rhetoric of IT outsourcing has included an expectation that a "world-class strategic partner" will also be a source of new ideas and practices, leading to increased business value over time. It is in these dimensions of innovation and "added value" that firms have most commonly been disappointed. Consequently, our research has focused on how improved innovation outcomes can be achieved.
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