Procurement Strategies for Information Systems.

Author List: Saarinen, Timo; Vepsalainen, Ari P.J.;

Journal of Management Information Systems, 1994, Volume 11, Issue 2, Page 187-208.

A general framework of different procurement strategies is introduced to help managers review their project portfolio to find more effective ways of using both internal and market resources in information systems development. Major decision criteria-the specificity of system design and the uncertainty involved in requirements specification-are adopted from transaction cost economics to determine what procurement strategies should be used in different situations. According to our Procurement Principle, systems that are company-specific and involve high uncertainty have to be internally developed because they require both the specific knowledge arid intensive interaction between developers and users. More standard requirements indicate the use of outside consultants or software contractors who have experience and knowledge about a similar type of systems. For routine systems common in many organizations, acquisition and tailoring of a software package provides the most efficient procurement strategy. The Procurement Principle is also empirically tested with data from recent system development projects in major Finnish companies. Partial support was gained for the framework, but some interesting deviations were also detected, such as a tendency to rely on in-house development of even routine systems.

Keywords: contingency approach;information systems procurement;outsourcing

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List of Topics

#154	0.186	memory support organizations information organizational requirements different complex require development provides resources organization paper transactive depth process outside difficult breadth
#20	0.165	procurement firms strategy marketing unified customers needs products strategies availability informedness proprietary purchase resonance policies open-source compatible competitors differentiation involve
#192	0.107	small business businesses firms external firm's growth size level expertise used high major environment lack resources companies internally factors internal
#152	0.090	software development process performance agile processes developers response tailoring activities specific requirements teams quality improvement outcomes productivity improve fit maturity
#274	0.090	outsourcing transaction cost partnership information economics relationships outsource large-scale contracts specificity perspective decisions long-term develop requirements economic association factors hypotheses
#77	0.062	information systems paper use design case important used context provide presented authors concepts order number various underlying implementation framework nature
#83	0.062	personal computers use lead order using users pcs innovativeness understanding professional help forces gained usage increase trends parallel introduced expressed