Design for Supplier Performance Assessment Model of Information Technology Service Provider in Small Medium Enterprises in Indonesia

. This study aims to design a supplier performance assessment model for information technology services provider in small medium enterprises (SME) in Indonesia. Supplier performance assessment is important to improve supplier performance and maintain long-term relationships between SME (buyer) and their suppliers. This supplier Assessment models are developed based on the review literature and interviews with procurement staff in SMEs. Performance assessment criteria are identified and tested for validity by providing a questionnaire to procurement section in SMEs. In order to obtain importance weight of each criteria toward performance score, a questionnaire to weighed the criteria are distributed to procurement staff and analyzed the answers using the Analytical Hierarchy Process (AHP) method. The final performance score is calculated based on the standardized value of each criteria multiplied by its weight. Based on the implementation of this model in SMEs, it is known that the proposed model is suitable to assess the supplier's performance and greatly help the SMEs in managing the performance of their suppliers.


Introduction
Today, companies tend to outsource their goods and services and focus on their core business. this resulted in the company increasingly dependent on suppliers. The company's performance is highly rely on supplier performance [1]. Based on [2], it was found that the contribution of procurement and supply chain cost is 30% to 70% of cost of good sold in some industries such as chemical and automotive. In managing vendors, many organizations reduce the number of suppliers and prefer to manage relationships with strategic suppliers in the long term [3]. Unfortunately, the company's dependence is not followed by a system of supplier performance assessment. Until now, many companies don't conduct the evaluation and monitoring of supplier performance regularly [4].
There are various types of vendors, one of the types is a vendor that specialized in information technology (IT) provider. Various services that can be provided by IT vendors include: system integration, system inspection, system management, internet management, software development, software verification, software maintenance, hardware maintenance, hardware operation, management of facilities, internet services. Information technology (IT) is very important for a company because through IT, companies can easily achieve competitive advantage and gain profit. The use of IT has evolved into 'commodities' where IT can be said to be a must-have for any company [5]. Considering the importance of IT and its vendors within a company, then the company needs to manage the performance of IT vendors and companies need to perform supplier performance assessment.
Supplier performance assessment has been widely investigated by many researchers in previous study. They used different criteria and different criteria and methods to develop supplier assessment model and up to now there is no agreement what criteria can be used for vendor performance assessment. The focus of previous researchers more on assessing for vendor selection, while for monitoring and assessment of vendor performance is still very limited. Therefore, this research will propose a model for assessment and monitoring vendor performance especially vendor IT in small medium enterprises in Indonesia.

Literature review
There are many studies on the measurement of vendor selection criteria but very few for examining the model in measuring and monitoring supplier performance. Supplier performance assessment is a technique to measure the actual performance of suppliers and assesment based on predetermined criteria and give suppliers value based on the measurement results. This becomes important in maintaining relationships with suppliers and for consideration of the future relationship. While the vendor selection is a process of getting vendors with various predetermined criteria [6]. Some research in vendor selection system is done on a large industry and the public procurement of goods and services but on SMEs and for special items of IT is still very limited. The assessment methods are varied and no agreement what method is most appropriate. Here are some researches on vendor selection methods by previous researchers with different methods.
The study of IT vendor selection criteria in SMEs is done by [7] which examines the criteria of vendor selection in SMEs Taiwan by using multivariate analysis. This study yields a conclusion of criteria that can be used in vendor selection. A hybrid model consist of five steps to support the vendor selection is proposed by [8] and this research using Multi criteria decision making (MCDM) approach. Analityc Network Process (ANP) approach is employed to obtain relative weighting of criteria and modified TOPSIS (Techniques for order preference by similarity to ideal solution) for vendor evaluation process. The proposed model also provides a framework for designing and improving adequate criteria and reducing risks in choosing unsuitable vendors. A study conducted by [9] aimed at developing criteria and providing a model for testing the relationships and impacts related to the selection of supplier by using Fuzzy DEMATEL method. The study was conducted using literature study and review some related articles and found 43 important criteria in selecting a vendor. The criteria were chosen according to the importance of using Delphi fuzzy method and obtained 14 important criteria and then made a dematel questionnaire and distributed among 11 experts and members in Islamic Azad University of Yadz. The Result of this study is that stable financial criteria have the greatest impact in optimal supplier selection and security is the lowest. A study focused on developing a decision support system for supplier selection strategies based on the AHP method using case study in automotive industry in Pakistan is conducted by [10]. A sensitivity analysis to check the strength of the vendor also has been done in this research. Another study carried out by [11] to propose voting methods using AHP to determine the final rankings of vendors. This method called Voting AHP (VAHP). The results of the study literature mentioned above will be used develop the criteria of supplier performance assessment models specifically for IT suppliers in SME Indonesia.

Research Methodology
The steps of this study consist of 6 stages as follows: identify criteria of supplier performance assessment, criteria screening , determining the weights of criteria using AHP, determining the rating scale, formulation of supplier assessment model, implementation of the model.

Identify criteria of supplier performance assessment
Based on literature review, it is found that some criteria are important and often used in vendor assessment. In this study, the model divided into two categories, that is model for Software & Hardware supplier assessment and model for Sistem Development supplier assessment. Table 1 shows criteria and its sources. In this study, the criteria of previous research were modified and adapted to the needs of IT procurement in SME. the proposed criteria are based on the above review literature and interviews with the procurement staff in the SME, as given in Table 2.

Criteria Screening
At this stage, the questionnaires are distributed to 12 IT procurement experts and practitioners which aim to determining the importance level of criteria. Only criteria with a value greater than 3 will be used as performance measurement criteria in this study. Base on the screening result, The criteria financial stability, no legal problems are removed because the average value is less than 3.

Determining the weights of criteria using AHP
The importance weigh of criteria is determined using AHP methods by distributing AHP Questionnaire to 5 expert. The important weight Resulted from of the AHP analysis are given in Table 2.

Determining the rating scale
The rating scale of the assessment is ranging from 1-5, from poor to Very good.

Formulation of supplier assessment model
Vendor performance assessment models is formulate based on selected criteria and it's weight. The vendor's performance score is the multiplication of performance value with its importance weight. The Supplier performance assessment model for Sofware&Hardware Category is presented in Table 2  History of performance and service is good 3 Bad performance history but good service 2 Good performance history but bad service 1 History of performance and service is not good

Model Implementation
The last stage is to implement the model on 2 IT vendors for software hardware vendors and system development. each vendor is assessed based on the proposed model. It is found that the model can assist in evaluating vendor's performance and facilitate objective assessment. Previously they do not have a scoring system and vendor assessment has been done subjectively.

Discussion
In general, this study has the same flow as the research conducted by [7] that generates an evaluation model that can be used to select IT vendors. The difference is that this study focuses on performance appraisal and vendor monitoring. the other difference is in the determination of different rating scales as well as the different weights and types of criteria tailored to the needs of the SME IT vendors in Indonesia. Another difference is that the research is broader because the model in this study is divided into two categories, namely the vendor category of software & hardware providers and the vendor category of the system development service providers, while the model in the previous research only focus on IT outsourcing providers or system development. There are several common criteria, ie : System development tools and document completeness, ease of communication, vendor ability to solve problems, vendor's ability to manage projects, maintain confidentiality, flexibility of contract terms and time of system development and reputation. However, two criteria that are considered important by SMEs in Taiwan but considered not important by SME Indonesia, ie financial stability and no legal problems. The four criteria of price, quality, delivery and service are the most widely used criteria in selecting or valuing vendors in general [6] and [10].These four criteria are also the criteria used in this study.This indicates that price, quality, delivery and service are the criteria that can be used in assessing the various vendors of both vendors in general, vendors in the automotive industry and also IT vendors. Similarly, [12] describes some important criteria for selecting vendors in the food industry. Some of the criteria used to select vendors in the food industry are also important criteria for SME IT vendors, including price, quality, delivery time and flexibility. However, there is one important criterion for selecting vendors in the food industry but it is not important for the SME vendor, that is, the stable financial condition of vendors. This criterion according to [9]is also an important criterion in choosing a vendor for education (university). In this study, honest and confidential criteria are the most important criteria in assessing the performance of IT vendors for SMEs. This is in line with other research features such as [13], [11] and [7] the location of the vendor is one of several criteria considered important in the selection and assessment of the vendor. This is in line with the results of other researchers that close location will facilitate monitoring vendor performance [14], [13], [15].
Reputation criteria are important criteria in this research. It also agrees with [16] which in his research use reputation as one of the six criteria used in selecting vendors for IT and [17] who argue that reputation is one of seven important criteria related to outsourcing Information Systems. reputation criteria are also important in assessing or selecting common vendors such as those found in [18] and [19]. The criteria of ease of communication and responsibility in resolving complaints are the two important criteria found in this study. In previous studies, both criteria were also widely used in selecting and assessing vendor performance both in general and IT vendors. [8], [16] and [9].

Conclusion
There are several conclusions from this study.The most important criteria for performance assessment of software & hardware vendors and system development is honest and can keep company secrets. while the least important criterion for vendor software & hardware assessment is vendor location and for system development category is system development cost. Criteria in vendor performance assessment for various industries are relatively similar, but with different importance level. The resulting model can be used by the SMEs in assessing the performance of vendor software & hardware providers and system development.The opportunity for further research is to examine the relationship between criteria to determine which criteria most influence other criteria. Interpretive structural modeling model and Equation Structural Modeling could be used for further research.