The Provision of Inter-organisational Infrastructure as An Appropriate Role for Cosourcing (Track 1, Session 15)
Author(s) :
Mark Borman (The University of Sydney, Australia)
Abstract : A case study of credit unions in the financial services sector in Australia designed to examine the motivations and constraints to cosourcing � or the sourcing of a common activity jointly by a group of organizations. It is proposed that externalities and economies of scale are the prime motivations for cosourcing and that organizations are constrained by the need to ensure that they do not compromise any of their core capabilities. The case study also seeks to assess whether consequently the provision of inter-organisational infrastructure is an appropriate focus for cosourcing. The cosourcing initiative examined was the provision of core banking systems and the associated computer services to credit unions. Credit unions are member owned financial institutions that provide a comprehensive range of retail banking products and services. Around 180 credit unions currently operate in Australia with 3.6 million members and more than $29 billion in assets. A core banking system is the IT application that provides the core transaction processing capabilities � encompassing back office, origination, front office and teller processing activities � that enables a credit union to develop and manage its various savings and loans products. A total of 14 credit unions were interviewed representing over 25% of the total asset base of the sector. The findings of the research are broadly positive but suggest that multiple alternative cosourcing initiatives will emerge to support a particular activity, or set of activities, within an industry sector. In part this is as a result of the varied requirements of different organizations but it is also due to a desire to ensure the competitiveness of cosourcing providers.

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