TY - JOUR
T1 - Option-based management of technology investment risk
AU - Benaroch, M.
N1 - Funding Information:
Manuscript received May 4, 1999; revised August 15, 2000. This research was supported by the Breathen Institute for Operations Management, School of Management, Syracuse University, under a summer research grant. Review of this manuscript was arranged by Department Editor R. Balachandra. The author is with the School of Management, Syracuse University, Syracuse, NY 13244 USA (e-mail: [email protected]). Publisher Item Identifier S 0018-9391(01)10258-8.
PY - 2001/11
Y1 - 2001/11
N2 - Real operating (flexibility) options embedded in a technology investment are valuable because they allow management to take rational, value-adding actions that could favorably affect operational traits of the investment (timing, scale, scope, etc.). These options, however, are not inherent in technology investments. Rather, they usually must be carefully planned and designed to fit each investment differently. Building on concepts from the area of financial risk management, this paper presents a methodology for planning the creation of specific operating options designed to maximize the value of a technology investment in light of the risks underlying that investment. The paper also illustrates the use of the methodology in the context of a Web-based information technology investment.
AB - Real operating (flexibility) options embedded in a technology investment are valuable because they allow management to take rational, value-adding actions that could favorably affect operational traits of the investment (timing, scale, scope, etc.). These options, however, are not inherent in technology investments. Rather, they usually must be carefully planned and designed to fit each investment differently. Building on concepts from the area of financial risk management, this paper presents a methodology for planning the creation of specific operating options designed to maximize the value of a technology investment in light of the risks underlying that investment. The paper also illustrates the use of the methodology in the context of a Web-based information technology investment.
KW - Investment risk
KW - Investment structure
KW - Project management
KW - Real options
KW - Risk management
KW - Technology investment
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U2 - 10.1109/17.969422
DO - 10.1109/17.969422
M3 - Article
AN - SCOPUS:0035517585
SN - 0018-9391
VL - 48
SP - 428
EP - 444
JO - IEEE Transactions on Engineering Management
JF - IEEE Transactions on Engineering Management
IS - 4
ER -