Managing the Tension between Standardization and Customization in IT-enabled Service Provisioning: A Sensemaking Perspective

The outsourcing literature has offered a plethora of perspectives and models for understanding decision determinants and outcomes of outsourcing of business processes. While past studies have contributed significantly to scholarly research in this area, there are an insufficient number of studies that are provider centric. Consequently, there is a need to understand how service providers address a core challenge: to achieve scalable growth by developing standardized offerings that can be sufficiently customized to meet the unique demands of individual customers. This study explores how patterns of collective action within and between a provider and two of their largest customers relate to the tension between standardization and customization of information technology (IT)-enabled service provisioning. Specifically, it investigates the relationship between such behavioral patterns and the development of an enterprise architecture designed to address the tension between standardization and customization. A socio-cognitive sensemaking framework consisting of six core properties provides the analytical lens through which the relationship is investigated. The study adopts an interpretive case study methodology guided by the assumption that distinct dimensions of the social world exist, but understanding them comes from inter-subjective interaction between researcher and subject. The approach adopts a combination of literal and theoretical replication strategies (Yin 1994) to help identify similarities and dissimilarities during cross case comparison. Data were collected from semi-structured interviews, direct observations, participant observations, and analysis of documentation and archival records. Our findings suggest that localized action at the expense of global coordination exacerbates the tension between standardization and customization. Furthermore, attempts to address the tension through the logics of spatial and temporal separation proved largely ineffective, as these initiatives put added pressure on the sensemaking processes responsible for guiding collective action. Our findings further suggest that a paradigm modification might be useful for service providers, where they shift their focus from reducing equivocality to improving their internal ability to respond to it. The results of this study contribute to a large body of outsourcing literature that has too often neglected a provider centric perspective. By uncovering key factors that exacerbate the tension within and between organizations, and providing practical methods for addressing them, this study also offers valuable insight for practicing managers.