Exploring modularity on innovative IT partnerships

This thesis explores the dynamics of strategic innovation within enterprises, specifically focusing on innovative IT partnerships. Traditionally, IT innovation was often pursued through outsourcing, but this approach has faced significant challenges, partly due to issues related to modularity. Traditional IT outsourcing contracts, rooted in transactional agreements, often limit innovation due to their focus on clear, predictable outcomes and risk reduction, which is incompatible with the inherent unpredictability of innovation. This has led to a noticeable shift from transaction-based engagements towards innovative partnerships. While research exists on traditional outsourcing, there is a lack of knowledge on the strategic innovation aspect of innovative IT partnerships from both managerial and structural perspectives. The central research question guiding this thesis is: What is the influence of modularity on the adaptability of innovative IT partnerships? This question is broken down into three sub-questions focusing on relevant change drivers, the construction model of an innovative IT partnership, and the impact of modularity on its quality attributes. The core idea is that innovation is unpredictable, and thus, partnerships must be adaptable or "evolvable". Modularity is presented as a design principle for creating structures that enable adaptability. Normalized Systems Theory (NST) is introduced as a theory and set of design principles for creating evolvable systems, aiming to prevent ripple and combinatorial effects when changes occur. NST can help align partner and partnership interests (especially through managing CCC and SoC), its traditional role of minimizing ripple effects might actually hinder innovation in partnerships by creating barriers to essential collaboration and interdependency. The research highlights the tension between the need for partner autonomy (supported by modularity) and the need for interdependency (essential for collaboration and synergy) in innovative IT partnerships. Successfully managing this balance is crucial.