Composite Techniques of Structural Equation Modeling and Analytic Hierarchy Process for Information Technology Vendor Selection

This paper had developed an effective information technology (IT) vendor selection model for banking & financial services industries (BFSI). For any business, profitability and growth depends on the right vendor selection in their purchase process. This paper identifies ten most influencing and important criteria with 43 sub-criteria to comprehend the vendor selection process. Furthermore, the authors developed a vendor selection score model using Structural Equation Modelling (SEM) and Analytic Hierarchy Process (AHP). This article intends to inform practice and conclude with practical recommendations to BFSI for vendor selection. The proposed composite technique identified the most eligible vendor to meet up with the buyer's strategies. This article suggests the most desirable vendor for the required benefit. Vendor 1 (Silverlake) with a score of 44% promised to be the most recommended one that also performed consistently in the sensitivity test.

Automated summary

This paper developed an effective IT vendor selection model for the banking & financial services industries, identifying ten main criteria and 43 sub-criteria, as well as a vendor selection score model. Practical recommendations for BFSI were provided, with Silverlake identified as the most recommended vendor.