Title: SOA investment decision-making using real options analysis

Authors: Lukas Auer

Addresses: Faculty of Computer Science, University of Vienna, Waehringer Strasse 29, A-1090, Vienna, Austria

Abstract: Service-oriented architecture (SOA) is still among the top priorities in IT investment planning. However, selecting proper evaluation methods to capture for flexibility and uncertainty associated with SOA implementations remains a major issue. This paper investigates investment methods and analyses the application of real options models in a particular SOA context. We explore and classify key criteria and embedded options for evaluating multi-stage SOA investments as sequential compound options. The determinants and value drivers for SOA platform acquisition and SOA application development projects are examined and general conclusions with regard to SOA investment decision-making are drawn. In this paper, we identify both the limitations of commonly used techniques as well as the concept's importance. A visualisation of the analysis is presented through a SOA management decision-framework explaining the relations between the steps of this framework and serving as guidance for SOA investment decision-makers.

Keywords: service-oriented architecture; SOA investment; real options analysis; ROA; investment decision making; investment planning; information technology.

DOI: 10.1504/IJSEM.2013.051873

International Journal of Services, Economics and Management, 2013 Vol.5 No.1/2, pp.21 - 40

Received: 14 Jun 2012
Accepted: 16 Oct 2012

Published online: 30 Apr 2014 *

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