Vendor Selection Strategy for IT Outsourcing: The Weighted-Criteria Evaluation Technique
Vendor Selection Strategy for IT Outsourcing: The Weighted-Criteria Evaluation Technique
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2014
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eng
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17 pages
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Journal of Enterprise Information Management, Vol. 27 Issue: 2, (2014), pp.122-138
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Abstract
Purpose – Most firms select their information technology outsourcing (ITO) vendors based on the
two methods of the weighted-criteria evaluation technique – the “qualification score plus the lowest
bid price for the highest price score (QS-LBHPS)” and the “qualification score plus the average bid
price for the middle price score (QS-ABMPS).” This paper aims to understand whether these two
methods provide the same or different results of vendor selection and how the proportional weights of
a vendor’s qualification and bid price affect the vendor selection results under the two methods.
Design/methodology/approach –In total, 1,000 experimental tests were carried out using the
developed spreadsheet template to examine vendor selection results of the two methods (QS-LBHPS and
QS-ABMPS) and compare the vendor selection results under three conditions of vendors’ qualification
and price weights. A correspondence analysis was also used to determine the proximal relationships
among the selection results of the weighted criteria technique under the comparable methods.
Findings – The results indicate that, when using the two methods of the weighted criteria technique
for a vendor selection, the selection results are significantly correspondent. In addition, the proportions
of qualification and price weights affect the selection results under the two methods. The different
proportions of qualification and price weights under the two methods yield the same selection results
rather than different results.
Originality/value – This study fills the gap in ITO literatures concerning the vendor selection
strategy. No empirical studies have been undertaken to compare the results of vendor selection under
the two methods of the weighted-criteria evaluation technique. The findings enable a firm’s selection
team to apply the weighted-criteria evaluation technique effectively and realize that vendor selection
results are altered based on the predefined proportions of qualification and price weights.