A Decision Model for Information Systems Outsourcing: Using a Multicriteria Method
- 1 School of Management, Dalian University of Technology
- 2 School of Computer Science & Technology, Dalian Maritime University
- 3 School of economic and management,Beihang University
Abstract
An ever-increasing trend in today’s firms is to exploit outsourcing for those information systems (IS) functions deemed to be outside the company’s core competence. Given the multi-attribute nature of IS outsourcing decision, this paper argues that five factors, including, strategy, economics, risk, environment and quality, should be considered for IS out-sourcing decisions, and proposes the use of analytic hierarchy process (AHP) and improved ELECTREIII as aids in making IS outsourcing decisions. The AHP is used to analyze the structure of the outsourcing problem and determine weights of the criteria, and the improved ELECTREIII method is used for final ranking. It shows by means of an appli-cation that the hybrid method is very well suited as a decision-making tool for the IS outsourcing decision. Finally, po-tential issues for future research are presented.
- Loh, L., & Venkatraman, N, “Determinants of infor-mation technology outsourcing: a cross-sectional analy-sis”, Journal of Management Information Systems, 1992, 9(1), 7-24.
- King, W.R, “Developing a sourcing strategy for IS: A behavioral decision process and framework”, IEEE Transaction Engineering Management, 2001, 48(1), 15-24
- Wu, F., & Li, H.Z, “The effect of knowledge man-agement on the successful outsourcing of IT/IS”, Science Research Management,2004, 25(2), 82-87.
- Lee, Jae-N, “The impact of knowledge sharing, organ-izational capability and partnership quality on IS out-sourcing success”, Information & Management, 2001, 38, 323-335.
- Lacity, M.C., Willcocks, L.P., & Feeny, D.F, “The value of IT sourcing”, Sloan Management Review, 1996, 37(3), 13-25.
- Venkatraman, N, “Beyond outsourcing: Management IT resources as a value center”, Sloan Management Review, 1997, 38(3), 51-64.
- Yang, C., & Huang, J, “A decision model for IS out-sourcing”, International Journal of Information Man-agement, 2000, 20(3), 225-239.
- Roy, V., & Aubert, B, “A resources-based analysis of IT sourcing”, ACM SIGMIS Database, 2002, 33(2), 29-40.
- Hsu, C.I., Chiu. C., & Hsu, P.L, “Predicting information systems outsourcing success using a hierarchical design of case-based reasoning”, Expert Systems with Ap-plication, 2004, 26(3), 435-441.
- Aubert, B.A., Riverd, S., & Patry, M, “A transaction cost model of IT outsourcing”, Information & Management, 2004, 41, 921-932.
- Saaty, T. L, The analytic hierarchy process. New York: McGraw Hill, 1980.
- Schniederjans M J, Garvin T. “Using the analytic hierarchy process and multi-objective programming for the selection of cost drivers in activity-based costing,” European Journal of Operational Research, 1997, 100: 72-80.
- Macharis C, Springael J, De Brucher K, Verbeke A. “PROMETHEE and AHP: the design of operational syn-ergies in multicriteria analysis. Strengthening PROME-THEE with ideas of AHP,” European Journal of Opera-tional Research, 2004, 153(2): 307-317.
- K. Miettinen, P. Salminen, “Decision-aid for discrete multiple criteria decision making problems with impre-cise data”, European Journal of Operational Research, 1999, 119: 50-60.
- M. Rogers, M. Bruen, “Using ELECTRE III to choose route for Dublin fort motorway”, Journal of Transportation Engineering, 2000, 126(4): 313-326.