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.