Paper Info
Title
A Real Options Approach for Prioritization of a Portfolio of Information Technology Projects: A Case Study of a Utility Company
Abstract
The valuation of information technology (IT) investments is particularly challenging because it is characterized by long payback periods, uncertainty, and changing business conditions. Corporate budgeting methods use accounting-based criteria like return on investment (ROI), internal rate of return (IRR), and payback period which were designed for projects with no option features. However, the uncertainties underlying IT investment decisions and the inability of traditional DCF methods to incorporate the impact of flexibility on project valuation force executives to rely on gut instinct when finalizing IT investment decisions. As corporations struggle with these issues, the valuation and prioritization of IT projects raises several challenges. In a survey of senior IT executives from 50 large firms with significant business-to-business experience, conducted by Forrester Research [11], respondents mentioned that they often struggled to prioritize project funding requests and lacked a method to coordinate funding decisions across their organizations.
Year
DOI
Venue
2004
10.1109/HICSS.2004.1265499
HICSS
Keywords
Field
DocType
project valuation force executive,utility company,case study,funding decision,payback period,senior it executive,information technology projects,it project,real options approach,it investment decision,finalizing it investment decision,long payback period,forrester research,project funding request,capital budgeting,internal rate of return,project management,information technology,return on investment,investment
Payback period,Economics,Discounted cash flow,Return on investment,Capital budgeting,Risk analysis (engineering),Portfolio,Modified internal rate of return,Corporate finance,Finance,Valuation (finance),Management science
Conference
ISBN
Citations 
PageRank 
0-7695-2056-1
14
0.78
References 
Authors
9
3
Name
Order
Citations
PageRank
Indranil Bardhan11675.75
Sugato Bagchi231141.10
Ryan Sougstad32119.48