Flexible ICT investments analysis using real options Online publication date: Sun, 31-Jul-2005
by Georgios N. Angelou, Anastasios A. Economides
International Journal of Technology, Policy and Management (IJTPM), Vol. 5, No. 2, 2005
Abstract: Information-communication technology (ICT) investments analysis using real options (ROs) has been a subject of active research during the last decade. It is a flexible method to value investment opportunities and to derive optimal timing of investments deployment taking into account uncertainties in future benefits and costs. We develop a framework for classifying the research on real ICT projects' evaluation using ROs. We analyse these projects with respect to three issues: the complexity of the ICT project; the ROs calculation method; the assumptions made. The ROs applicability on ICT projects has been successfully tested in a dozen real cases. The focus so far is on the evaluation of ICT investments that embed a single, apriori known option. Finally, we conclude and suggest directions for future research taking into account more complicated scenarios containing a number of ROs as well as the real competitive environment.
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