Managing Outsourced Software Projects: An Analysis of Project Performance and Customer Satisfaction

We examine the drivers of project performance and customer satisfaction in outsourced software projects using a proprietary panel dataset. The data cover 822 customer observations related to 182 unique projects executed by an India‐based software services vendor. Adopting a multidisciplinary perspective, we investigate how project planning, team stability, and communication effectiveness impact project performance and customer satisfaction. We delineate the direct and interactive influences of the antecedent variables. We also examine how these influences are moderated by two important project contexts: (a) the nature of software work (maintenance and development vs. testing projects) and (b) project maturity (new vs. mature projects). Among other results, we demonstrate that, when project planning capabilities are high, the positive impact of team stability and communication effectiveness on project performance is even higher. In addition, our results suggest that the impact of communication on project performance is muted when team stability is high. Finally, we also demonstrate that the impact of the antecedent variables on project performance varies with the nature of software work. Our findings offer specific and actionable insights to managers that can help them manage outsourced projects better, and open up new research perspectives in the context of outsourced project management.     

Sourcing Information Security Operations: The Role of Risk Interdependency and Competitive Externality in Outsourcing Decisions

Firms are increasingly outsourcing information security operations to managed security service providers (MSSPs). Cost reduction and quality (security) improvement are often mentioned as motives for outsourcing information security, and these are also the frequently cited reasons for outsourcing traditional information technology (IT) functions, such as software development and maintenance. In this study, we present a different explanation—one based on interdependent risks and competitive externalities associated with IT security—for firms' decisions to outsource security. We show that in the absence of competitive externalities and interdependent risks, a firm will outsource security if and only if the MSSP offers a quality advantage over in‐house operations, which is consistent with the conventional explanation for security outsourcing. However, when security risks are interdependent and breaches impose competitive externalities, although firms still have stronger incentive to outsource security if the MSSP offers a higher quality in terms of preventing breaches than in‐house management, a quality advantage of MSSP over in‐house management is neither a prerequisite for a firm to outsource security nor a guarantee that a firm will. In addition to MSSP quality, the type of externality (positive or negative), the degree of externality, whether outsourcing increases or decreases risk interdependency, and the breach characteristics determine firms' sourcing decisions. When security breaches impose a positive externality, the incentive to outsource is enhanced if the MSSP decreases the risk interdependency and diminished if the MSSP increases this interdependency. A negative externality has the opposite effect on firms' incentives to outsource. A high demand spillover to a competitor, together with a high loss in industry demand because of a security breach, enhances these incentives to outsource security operations when the externality is negative. Finally, we extend our base model in several dimensions and show that our main results regarding the impact of interdependent risks and competitive externalities on sourcing decisions are robust and generalizable to different specifications.     

企业内部服务质量、关系质量对内部顾客忠诚的影响机制:基于内部营销视角的实证研究

本文基于内部营销视角,揭示内部服务质量的各个组成因素之间的关系以及内部服务质量对关系质量的影响,进而探索内部服务质量、关系质量对内部顾客忠诚的影响机制。通过对某电信企业内部238份员工样本的采集分析,提出并验证内部服务质量(含实体环境质量、交互质量和结果质量)、关系质量(含内部顾客信任、满意)对内部顾客忠诚的影响机制整合模型。研究发现,内部服务质量的三个维度之间确实存在层级叠加作用,而服务质量则会通过信任这一中介变量影响内部顾客的满意、承诺。内部关系质量的三因素中,内部顾客的承诺水平对内部顾客的忠诚度有直接正向影响,提高对内部顾客的承诺水平是提高内部顾客忠诚度的关键。     

基于Stackelberg博弈模型的化工企业安全生产管理机制治理研究

本文针对我国传统化工企业安全生产管理机制治理存在的漏洞,基于Stackelberg博弈模型,对政府部门与化工企业之间进行动态博弈分析。首先针对政府制定安全生产管理机制的策略、针对化工企业确定产量与安全成本的策略,同时引入政府监管检查概率、社会公众监督举报安全事故的概率,以政府部门的社会效益、化工企业的经营效益为支付,分析政府与化工企业的最优反应函数,构建一种新的安全生产管理机制治理研究模型。研究发现,化工企业投入的安全生产管理费用是单位产量可变成本、被政府查处或被社会公众监督举报概率、平均损失、罚款的递增函数。政府制定的平均罚款金额是平均损失、被政府查处或被社会公众监督举报概率的递减函数。化工企业安全成本与生产成本比例的最小值与投入的最大资金呈正相关,与安全事故造成的损害上限呈负相关。通过对博弈模型进行算例分析,发现模拟结果与研究结果相一致。本文的结论可以看作是对当下提高企业安全生产管理机制合理性与有效性的一种思考。     

Robustness of Optimal Investment Decisions in Mixed Insurance/Investment Cyber Risk Management

An integrated risk management strategy, combining insurance and security investments, where the latter contribute to reduce the insurance premium, is investigated to assess whether it can lead to reduced overall security expenses. The optimal investment for this mixed strategy is derived under three insurance policies, covering, respectively, all the losses (total coverage), just those below the limit of maximum liability (partial coverage), and those above a threshold but below the maximum liability (partial coverage with deductibles). Under certain conditions (e.g., low potential loss, or either very low or very high vulnerability), the mixed strategy reverts however to insurance alone, because investments do not provide an additional benefit. When the mixed strategy is the best choice, the dominant component in the overall security expenses is the insurance premium in most cases. Optimal investment decisions require an accurate estimate of the vulnerability, whereas larger estimation errors may be tolerated for the investment-effectiveness coefficient.     

When to Mass Customize: The Impact of Environmental Uncertainty*

Previous research on mass customization (MC) has focused on what it is and how it is implemented. In this study we examine when MC is an appropriate strategy for firms to follow by scrutinizing the effects of three environmental uncertainty variables (demand uncertainty, competitive intensity, and supply chain complexity) on the MC–performance relationship. Specifically, we distinguish the direct effect of environmental uncertainty on MC ability and the moderation effect of environmental uncertainty on MC ability's impact on customer satisfaction. We examine six competing hypotheses using data collected from 266 manufacturing plants. Our results show that competitive intensity has a direct positive impact on MC ability. However, demand uncertainty moderates the relationship between MC ability and customer satisfaction, and the direct and positive relationship between MC ability and customer satisfaction holds only when customer demand is highly uncertain. Supply chain complexity neither has a direct relationship with MC, nor moderates the MC–performance relationship. Implications of these research findings are discussed and future research directions are identified.     

Incorporating cost and environmental factors in quality function deployment using data envelopment analysis

Quality function deployment (QFD) is an important tool available to organizations for efficient product design and development. Traditionally, QFD rates the design requirements (DRs) with respect to customer needs, and aggregates the ratings to get relative importance scores of DRs. An increasing number of studies stress on the need to incorporate additional factors, such as cost and environmental impact, while calculating the relative importance of DRs. However, there is a paucity of methodologies for deriving the relative importance of DRs when several additional factors are considered. In this paper, data envelopment analysis (DEA) is suggested for the purpose. It is proved that the relative importance values computed by DEA coincide with traditional QFD calculations when only the ratings of DRs with respect to customer needs are considered, and when only one additional factor, namely cost, is considered. DEA provides a general framework facilitating QFD computations when more factors need to be considered. The calculations are explained using a step-by-step procedure and illustrations. The proposed QFD–DEA methodology is applied to the design of security fasteners for a Chinese company. Though traditional QFD calculations consider the ratings as cardinal numbers, DEA has the flexibility to treat the ratings as qualitative variables. This aspect is illustrated in a separate section.     

Cost of Equity in Homeland Security Resource Allocation in the Face of a Strategic Attacker

Hundreds of billions of dollars have been spent in homeland security since September 11, 2001. Many mathematical models have been developed to study strategic interactions between governments (defenders) and terrorists (attackers). However, few studies have considered the tradeoff between equity and efficiency in homeland security resource allocation. In this article, we fill this gap by developing a novel model in which a government allocates defensive resources among multiple potential targets, while reserving a portion of defensive resources (represented by the equity coefficient) for equal distribution (according to geographical areas, population, density, etc.). Such a way to model equity is one of many alternatives, but was directly inspired by homeland security resource allocation practice. The government is faced with a strategic terrorist (adaptive adversary) whose attack probabilities are endogenously determined in the model. We study the effect of the equity coefficient on the optimal defensive resource allocations and the corresponding expected loss. We find that the cost of equity (in terms of increased expected loss) increases convexly in the equity coefficient. Furthermore, such cost is lower when: (a) government uses per‐valuation equity; (b) the cost‐effectiveness coefficient of defense increases; and (c) the total defense budget increases. Our model, results, and insights could be used to assist policy making.     

Market Impact on IT Security Spending

Traditionally, IT security investment decisions are made in isolation. However, as firms that compete for customers in an industry are closely interlinked, a macro perspective is needed in analyzing these decisions. We utilize the notions of direct‐ and cross‐risk elasticity to describe the customer response to adverse IT security events in the firm and competitor, respectively, thus allowing us to analyze optimal security investment decisions. Examining both symmetric and asymmetric duopoly cases using a continuous‐time Markov chain (CTMC) model, we demonstrate that optimal IT security spending, expected firm profits and willingness of firms to cooperate on security improvements are highly dependent on the nature of customer response to adverse events. We also examine the investment problem when security attacks on different firms are correlated.     

A Mathematical Model of Service Failure and Recovery Strategies*

Understanding the nature of service failures and their impact on customer responses and designing cost‐effective recovery strategies have been recognized as important issues by both service researchers and practitioners. We first propose a conceptual framework of service failure and recovery strategies. We then transform it into a mathematical model to assist managers in deciding on appropriate resource allocations for outcome and process recovery strategies based on customer risk profiles and the firm's cost structures. Based on this mathematical model we derive optimal recovery strategies, conduct sensitivity analyses of the optimal solutions for different model parameters, and illustrate them through numerical examples. We conclude with a discussion of managerial implications and directions for future research.     

顾客消费情感对顾客满意感的影响

作者在广州某高校内的餐厅进行了一次实证研究,探讨顾客感觉中的服务质量、顾客情感和顾客满意感之间的关系。数据分析结果表明,顾客感觉中的软质量直接影响顾客餐后的正面情感,而顾客餐后的正面情感直接影响顾客满意感;顾客对软、硬质量的期望与服务实绩之差对顾客餐后的正面情感、顾客满意感都有显著的直接影响,顾客对软质量的期望与服务实绩之差对顾客餐后的负面情感也有显著的直接影响。此外,顾客餐前的情绪也会影响顾客餐后的情感和顾客对自己就餐经历的评估。     

Using Probabilistic Terrorism Risk Modeling for Regulatory Benefit-Cost Analysis: Application to the Western Hemisphere Travel Initiative in the Land Environment

This article presents a framework for using probabilistic terrorism risk modeling in regulatory analysis. We demonstrate the framework with an example application involving a regulation under consideration, the Western Hemisphere Travel Initiative for the Land Environment, (WHTI‐L). First, we estimate annualized loss from terrorist attacks with the Risk Management Solutions (RMS) Probabilistic Terrorism Model. We then estimate the critical risk reduction, which is the risk‐reducing effectiveness of WHTI‐L needed for its benefit, in terms of reduced terrorism loss in the United States, to exceed its cost. Our analysis indicates that the critical risk reduction depends strongly not only on uncertainties in the terrorism risk level, but also on uncertainty in the cost of regulation and how casualties are monetized. For a terrorism risk level based on the RMS standard risk estimate, the baseline regulatory cost estimate for WHTI‐L, and a range of casualty cost estimates based on the willingness‐to‐pay approach, our estimate for the expected annualized loss from terrorism ranges from $2.7 billion to $5.2 billion. For this range in annualized loss, the critical risk reduction for WHTI‐L ranges from 7% to 13%. Basing results on a lower risk level that results in halving the annualized terrorism loss would double the critical risk reduction (14–26%), and basing the results on a higher risk level that results in a doubling of the annualized terrorism loss would cut the critical risk reduction in half (3.5–6.6%). Ideally, decisions about terrorism security regulations and policies would be informed by true benefit‐cost analyses in which the estimated benefits are compared to costs. Such analyses for terrorism security efforts face substantial impediments stemming from the great uncertainty in the terrorist threat and the very low recurrence interval for large attacks. Several approaches can be used to estimate how a terrorism security program or regulation reduces the distribution of risks it is intended to manage. But, continued research to develop additional tools and data is necessary to support application of these approaches. These include refinement of models and simulations, engagement of subject matter experts, implementation of program evaluation, and estimating the costs of casualties from terrorism events.     

Use of Fuzzy Evidential Reasoning in Maritime Security Assessment

Over the last few years, there has been a growing international recognition that the security performance of the maritime industry needs to be reviewed on an urgent basis. A large number of optional maritime security control measures have been proposed through various regulations and publications in the post-9/11 era. There is a strong need for a sound and generic methodology, which is capable of taking into account multiple selection criteria such as the cost effectiveness of the measures based on reasonable security assessment. The use of traditional risk assessment and decision-making approaches to deal with potential terrorism threats in a maritime security area reveals two major challenges. They are lack of capability of analyzing security in situations of high-level uncertainty and lack of capability of processing diverse data in a utility form suitable as input to a risk inference mechanism. To deal with such difficulties, this article proposes a subjective security-based assessment and management framework using fuzzy evidential reasoning (ER) approaches. Consequently, the framework can be used to assemble and process subjective risk assessment information on different aspects of a maritime transport system from multiple experts in a systematic way. Outputs of this model can also provide decisionmakers with a transparent tool to evaluate maritime security policy options for a specific scenario in a cost-effective manner.     

On Determining Specifications and Selections of Alternative Technologies for Airport Checked-Baggage Security Screening

Federal law mandates that every checked bag at all commercial airports be screened by explosive detection systems (EDS), explosive trace detection systems (ETD), or alternative technologies. These technologies serve as critical components of airport security systems that strive to reduce security risks at both national and global levels. To improve the operational efficiency and airport security, emerging image-based technologies have been developed, such as dual-energy X-ray (DX), backscatter X-ray (BX), and multiview tomography (MVT). These technologies differ widely in purchasing cost, maintenance cost, operating cost, processing rate, and accuracy. Based on a mathematical framework that takes into account all these factors, this article investigates two critical issues for operating screening devices: setting specifications for continuous security responses by different technologies; and selecting technology or combination of technologies for efficient 100% baggage screening. For continuous security responses, specifications or thresholds are used for classifying threat items from nonthreat items. By investigating the setting of specifications on system security responses, this article assesses the risk and cost effectiveness of various technologies for both single-device and two-device systems. The findings provide the best selection of image-based technologies for both single-device and two-device systems. Our study suggests that two-device systems outperform single-device systems in terms of both cost effectiveness and accuracy. The model can be readily extended to evaluate risk and cost effectiveness of multiple-device systems for airport checked-baggage security screening.     

Diagnosing Customer Value: Integrating the Value Process and Relationship Marketing

The concept of value and, more specifically, customer value is of increasing interest to both academics and practitioners. This paper undertakes a substantial review of past and current literature on value and categorizes this considerable body of research into nine streams of literature. Building on the emerging relationship marketing paradigm, it then proposes a framework for relationship value management. Nine core streams of value literature are identified and discussed: consumer values and consumer value; the augmented product concept; customer satisfaction and service quality; the value chain; creating and delivering superior customer value; the customer's value to the firm; customer‐perceived value; customer value and shareholder value; and relationship value. To date, the core focus of most of this literature has been on the nature of value from the perspective of the organization and its customers – the customer–supplier relationship. However, it is argued that the emergence of the relationship marketing paradigm has emphasized the role of other stakeholders in building relationships. An existing multiple stakeholder model of relationship marketing, the six markets model, is introduced and is integrated with key concepts from the value literature to produce a conceptual framework for relationship value management.     

A NUMERICAL ANALYSIS OF CAPACITATED POSTPONEMENT

Customer satisfaction can be achieved by providing rapid delivery of a wide variety of products. High levels of product variety require correspondingly high levels of inventory of each item to quickly respond to customer demand. Delayed product differentiation has been identified as a strategy to reduce final product inventories while providing the required customer service levels. However, it is done so at the cost of devoting large production capacities to the differentiation stage. We study the impact of this postponement capacity on the ability to achieve the benefits of delayed product differentiation. We examine a single‐period capacitated inventory model and consider a manufacturing system that produces a single item that is finished into multiple products. After assembly, some amount of the common generic item is completed as non‐postponed products, whereas some of the common item is kept as in‐process inventory, thereby postponing the commitment to a specific product. The non‐postponed finished‐goods inventory is used first to meet demand. Demand in excess of this inventory is met, if possible, through the completion of the common items. Our results indicate that a relatively small amount of postponement capacity is needed to achieve all of the benefits of completely delaying product differentiation for all customer demand. This important result will permit many firms to adopt this delaying strategy who previously thought it to be either technologically impossible or prohibitively expensive to do so.     

The Economic Payout Model for Service Guarantees

Service guarantees consist of a promise to a customer (marketing), the delivery of a service to the customer (operations), and actions to appease the customer when service failures happen (recovery). A part of recovery involves offering the customer an economic and/or noneconomic payout when things go wrong. When the economic payout is too high or low, the impact on the organization and the customer is usually negative. Therefore, determining the size of the economic payout is of critical strategic and tactical importance in businesses. Yet, no systematic quantitative methods are found in the literature to help managers determine the economic payout for service failures. The current ways an economic payout is determined are management judgment, the consensus of customer focus groups, competitive benchmarking, and the use of simple expected value methods. In this article, we define the Economic Payout Model for Service Guarantees (EPMSG) that provides an optimal service guarantee economic payout under certain conditions. The EPMSG and its objective function considers customer revenue over the short‐ and long‐term, the cost of creating and providing the service, the cost of recovery, the probability of a service failure, and the probability of customer retention as a function of economic payout. A numerical example is provided of how EPMSG works. Customer retention probability distributions are examined assuming normal and gamma distributions. We end the article by describing the theoretical contributions, model limitations, managerial implications, and opportunities for future research.     

Optimal Resource Allocation for Defense of Targets Based on Differing Measures of Attractiveness

This article describes the results of applying a rigorous computational model to the problem of the optimal defensive resource allocation among potential terrorist targets. In particular, our study explores how the optimal budget allocation depends on the cost effectiveness of security investments, the defender's valuations of the various targets, and the extent of the defender's uncertainty about the attacker's target valuations. We use expected property damage, expected fatalities, and two metrics of critical infrastructure (airports and bridges) as our measures of target attractiveness. Our results show that the cost effectiveness of security investment has a large impact on the optimal budget allocation. Also, different measures of target attractiveness yield different optimal budget allocations, emphasizing the importance of developing more realistic terrorist objective functions for use in budget allocation decisions for homeland security.     

Balancing Production and Distribution in Paper Manufacturing

A paper manufacturing plant minimizes its production cost by using long production runs that combine the demands from its various customers. As jobs are completed, they are released to distribution for delivery. Deliveries are made by railcars, each of which is dedicated to one customer. Long production runs imply that maximizing railcar utilization requires holding the cars over several days or holding completed jobs within the loading facility. Each of these methods imposes a cost onto the distribution function. We find how distribution can minimize its cost, given production's schedule. We then consider the problem of minimizing the company's overall cost of both production and distribution. A computational study using general data illustrates that the distribution cost is reduced by 25.80% through our proposed scheme, and that the overall cost is reduced an additional 4.40% through our coordination mechanism. An optimal algorithm is derived for a specific plant's operations.     

Integration of IPA and QFD to assess the service quality and to identify after sales service strategies to improve customer satisfaction – a case study

Customer satisfaction is considered very essential nowadays as it shows how firms are dedicated to afford quality products or services to their customers. Retaining the existing customer and acquiring the new customers are the basic objectives of any organisation and after sales service (ASS) has acquired a strategic role as a mean to achieve customer satisfaction. Importance–performance analysis (IPA) and quality function deployment (QFD) are the powerful tools successfully applied in many fields. However, studies on application of these tools in investigating the ASS quality and customer satisfaction seems to be scarce. This article investigates linking of IPA, which is a simple and effective customer satisfaction tool and QFD in the improvement of ASS attributes in an effort to determine the appropriate ASS strategic action plans to be adopted with the objective of enhancing customer satisfaction. In this study, a customer-driven model is proposed to examine the importance of the various ASS attributes and the performance of the organisation via questionnaire survey, and through the IP analysis, the areas to be focused are identified to help the decision makers in devising suitable policies, to improve the ASS performance. This is achieved through the employment of QFD that will help decision makers in the strategic planning to attain better customer satisfaction. A case study is carried out to exhibit the effectiveness of the developed model in a firm involved in manufacturing the home appliances.