Title: Flexible ICT investments analysis using real options

Authors: Georgios N. Angelou, Anastasios A. Economides

Addresses: Department of Information Systems, University of Macedonia, Egnatia 156, Thessaloniki 54006, Greece. ' Department of Information Systems, University of Macedonia, Egnatia 156, Thessaloniki 54006, Greece

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.

Keywords: information and communication technology; ICT project evaluation; broadband networks; investment analysis; real options; net present value; NPV; ICT investment; information technology.

DOI: 10.1504/IJTPM.2005.007518

International Journal of Technology, Policy and Management, 2005 Vol.5 No.2, pp.146 - 166

Published online: 31 Jul 2005 *

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