A Real Options Perspective on Information Technology Investments under Uncertainty- An Empirical Study of ERP Investments
Date Issued
2008
Date
2008
Author(s)
Wu, Liang-Chuan
Abstract
Implementation of information technology solutions, which involve both technical and social uncertainties, is a high risk endeavor. Traditional information technology practices address the implementation of information technology as a static process; thus, such practices focus on structure, not on information technology as something that will meet the needs of a changing organization. As a result, many relevant uncertainties that cannot be predefined are not easily accommodated. Real Options (RO) theory, which addresses uncertainties over time, resolves uncertainties in changing environments that cannot be predefined. In this paper, we propose a Real Options perspective on the information technology implementation process with the focus on uncertainty. This perspective takes into consideration the often-changing nature of companies that undertake information technology implementations. In addition, we demonstrate how implementing information technology projects with Real Options theory facilitates active management. By actively managing information technology implementation, managers can improve their flexibility, take appropriate action to respond to the changing information technology environment, and achieve a more successful information technology implementation that better meets the needs of the organization.
Subjects
Active Management
Information Technology Investment
Real Options
Uncertainty
File(s)![Thumbnail Image]()
Loading...
Name
ntu-97-D92725010-1.pdf
Size
23.32 KB
Format
Adobe PDF
Checksum
(MD5):d1e0c2c1d97efe6e3de0c9bc4f01fa64