A Fuzzy Logic Multi-Criteria Decision Framework for Selecting IT Service Providers

• Main Authors: KARAMI, Amir, GUO, Zhiling
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2012
• Subjects: Analytical Hierarchy Process; Banking industry; Data envelope analysis; Fuzzy logic approach; Information systems outsourcing; IT service providers; Multicriteria decision-making; Outsourcing decisions; Perceived risk; Quantitative evaluation; Robust analysis; Survey data; Vendor Selection; Computer Sciences; Management Information Systems
• Online Access: https://ink.library.smu.edu.sg/sis_research/1866; https://ink.library.smu.edu.sg/context/sis_research/article/2865/viewcontent/4525b118.pdf
• Institution: Singapore Management University

Selecting IT service providers in information systems outsourcing involves both qualitative and quantitative evaluations. This paper proposes an integrated multi-criteria decision-making (MCDM) framework to effectively handle uncertainty and subjectivity in the vendor selection process. The proposed methods apply fuzzy logic approach to integrate qualitative survey data into traditional multi-criteria decision models such as data envelope analysis (DEA), analytical hierarchy process (AHP) methods, and TOPSIS. Based on case studies from Iranian banking industry, we empirically test the proposed framework and show it is superior to existing methods. We demonstrate that the fuzzy logic approach provides a robust analysis for vendor selection by appropriately trading off the perceived risks and benefits. It offers a comprehensive MCDM tool that can help practitioners prioritize vendor rankings and make optimal IS outsourcing decisions.