This paper develops a generalized model for computing capacity by identifying the main activities in a computer facility as formal transactions. The formal transactions carried out in a computing environment are characterized along two dimensions: freqency of occurrence and idiosyncrasy of assets. Vfe make recommendations as to how these formal transactons should be executed - across markets, internally or using intermediate forms of governance. It is shown that transactions in a computing facility fall into one of three categories: procurement of assets, maintenance and modification of assets, and collection, storage and processing of data into information. Formal transactions in a computing facility such as procurement of application software, recruiting for different positions, data entry and transformation of data into information are discussed in detail. The efficiency of possible forms of governance is analyzed for each formal transaction. Generalized efficiency criteria for the market approach versus managerial control are provided. The conclusions find an application in defining the boundaries of end-user computing as well as other computing facilities such as data centers.
Piptea, Michael and Pieptea, Dan
"Vertical integration of computing facilities, a transaction cost approach,"
Journal of International Information Management: Vol. 1
, Article 7.
Available at: http://scholarworks.lib.csusb.edu/jiim/vol1/iss1/7