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Continental Airlines entered into a ten-year outsourcing agreement with EDS when Continental Airlines was suffering financial setbacks and bankruptcy. This agreement was initially designed to provide expertise to Continental in an area that was not a core competency and to also help cut costs for the airline. However, Continental successfully turned their business around in the mid-1990s, and this case discusses the implications this has for the relationship between Continental and EDS. While this relationship had worked well initially, there were some strains developing by the mid-1990s, and this case focuses on where Continental should have gone with their relationship with EDS.

What are the advantages to a firm like Continental Airlines of outsourcing their IT operations? What are the disadvantages?

Why is necessary for top managers to support the implementations of IT innovations?

Support your statement with citations and references.

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