Developing a sourcing strategy for IS: a behavioral decision process and framework

A framework and process are developed for considering outsourcing, insourcing, internal markets and strategic alliance alternative sourcing strategies for information systems (IS) activities. The framework is behavioral in nature in that it mimics the way in which people actually make decisions. An activity whose sourcing is to be evaluated is initially assessed in terms of two criteria: critical success factor and core competency, which, respectively, reflect the traditional industrial economics paradigm and the more-recent resource-based theory of the firm. The two criteria, each at three possible levels, suggest a preliminary strategy that is used to begin a decision-making process for which the framework suggests consequences, both direct and unintended, that may be used to comprehensively evaluate the "working" strategy. The framework suggests consequences and issues for consideration that are derived from "lessons learned" from many real sourcing situations as well as research results. These issues are also intended to be suggestive of other issues that may apply to the particular decision situation. The framework and process should permit the comprehensive evaluation of a sourcing strategy for an IS activity in a fashion that uses rigorous theory-based criteria to support a judgmental decision process.