Japan. he has ten years of management consulting experience and has advised fortune 500 executives on information technology strategy and systems implementation.haluk demIrkan is a Clinical associate Professor of Information Systems and a research faculty member of the Center for Services leadership at the W.P. Carey School of Business at arizona State university. he has a Ph.D. in Information Systems and Operations Management from the university of florida. his research in service science and service-oriented management and technology solutions has included recent industry-sponsored research projects with american Express, Intel, IBM, Micro-Strategy, and teradata. other leading journals. he has 15 years of consulting experience in the areas of service-oriented solutions, information supply chain, business intelligence, and strategic business engineering with fortune 100 companies. he is the recent recipient of the IBM faculty award for a research project titled "Design Science for Self-Service Systems." P.k. kannan is a Professor of Marketing in the robert h. Smith School of Business at the university of Maryland. he is the Director for the Center of Excellence in Service. his research focuses on new product/service development, design and pricing of digital products and product lines, marketing and product development on the Internet, e-service, and customer loyalty. he has received several

Japan. He has ten years of management consulting experience and has advised Fortune 500 executives on information technology strategy and systems implementation. SUGATO BAGCHI is a Research Staff Member at the IBM Thomas J. Watson ResearchCenter in Yorktown Heights, New York. His current research interest is in valuation of information technology applications and infrastructure. He is currently working on the development and application of tools and techniques to help potential adopters of emerging technologies quantify the predicted benefits in terms of financial impact. Previously, he worked on knowledge representation frameworks and methodologies for business strategy formulation and on the design and implementation of a business process modeling and simulation tool for multi-enterprise supply chains. He holds a Ph.D. in Computer Science from Vanderbilt University. RYAN SOUGSTAD has seven years of experience in client sales and marketing with the IBM Corporation. He holds an MBA from the University of Texas at Dallas. His research interests center on information technology valuation and portfolio management. He has taught at the National American University in Rapid City, South Dakota, and is currently a doctoral student in Information Systems in the Carlson School of Management at the University of Minnesota ABSTRACT: Although the use of real options for valuation of information technology (IT) investments has been documented, little research has been conducted to examine its relevance for valuing and prioritizing a portfolio of projects. Complexities of IT projects along with the effect of project interdependencies raise several challenges in applying real options for prioritization of IT investments. We examine a large U.S.-based energy utility firm in a deregulated environment that is considering investment in a portfolio of 31 projects to provide a range of Internet-enabled energy services to customers. Using real data on expected project benefits and costs for different competitive scenarios, we develop a nested options model that extends prior research by incorporating the impact of project interdependencies to calculate the option value of all projects. Our nested options model provides a better understanding of project interdependencies on valuation and prioritization decisions, and provides insights Downloaded by [New York University] at 06:58 29 May 2015 34 BARDHAN, BAGCHI, AND SOUGSTAD into the business value of IT infrastructure projects that provide the managerial flexibility to launch future projects. We present a real options portfolio optimization algorithm for dynamic multiperiod portfolio optimization by incorporating the project values based on real options analysis in a portfolio management model with budget constraints.KEY WORDS AND PHRASES: business value, information technology, investment evaluation, net present value, portfolio optimization, real options analysis, sequential investment.THE VALUATION OF INFORMATION TECHNOLOGY (IT) investments is challenging because it is characterized...

No abstract

No abstract

No abstract