A multi-period optimization model for the procurement of component-based enterprise information technologies

Today, timely sharing and coordination of information across the supply chain are key factors to improving the performance of an organization. Although single-vendor enterprise information technologies (EITs) are seen as enablers for accomplishing this goal, a number of organizations are concerned about the high cost and time involved in such a solution. An alternative new paradigm has emerged in the form of componentized EITs, which are stand-alone software components that can be easily integrated with one other, and which provide the advantages of easing cash-flow problems and of decreasing customization times. Research in the evaluation of componentized EITs lacks objective assessment tools that simultaneously consider both procurement and inter-component integration issues. This paper fills this gap by proposing a multi-period integer-programming model to assist decision-makers in the procurement of componentized EITs. We consider component costs as well as inter-component integration costs over a given planning horizon and provide managerial insights based on different experiments with the model. (C) 2002 Elsevier Science B.V. All rights reserved.