Software Growth Options.

Author List: Taudes, Alfred;

Journal of Management Information Systems, 1998, Volume 15, Issue 1, Page 165-185.

Today's business environment is characterized by global competition and buyers' markets. Under such conditions, flexible response to changes in the environment is a key success factor for any firm. Consequently, there is increasing pressure for information systems to be readily adaptable to changing business processes. This paper investigates ways of introducing this aspect of IS extendability into quantitative IT investment decision models via the application of real options models. In particular, it examines methods for evaluating sequential exchange options in order to obtain estimates for the value of software growth options that is, IS functions that are embedded in an IT platform and that can be employed once the particular base system is installed and their use is economically justified. On the basis of these models, the authors look at the determinants of the value of software growth options and draw general conclusions with regard to decision making in the field of IT investment.

Keywords: capital budgeting; cost/benefit analysis of information systems; MIS platforms; real options

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List of Topics

#212	0.279	business digital strategy value transformation economy technologies paper creation digitization strategies environment focus net-enabled services processes insights challenges key response
#267	0.198	options real investment option investments model valuation technology value analysis uncertainty portfolio models using context intuitive managerial regret uncertain case
#77	0.084	information systems paper use design case important used context provide presented authors concepts order number various underlying implementation framework nature
#289	0.055	qualitative methods quantitative approaches approach selection analysis criteria used mixed methodological aspects recent selecting combining known conclusions included article appropriateness