FINFLEX-CM: A Conceptual Model for Financial Analysis of Solution Architectures Considering the Uncertainty and Flexibility

Pena, Yeimi; Miranda, Eduardo; Correal, Darío

doi:10.1007/978-3-319-66562-7_18

Cited by 1 publication

(9 citation statements)

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Section: Fig 1: Solution Architecture Approachmentioning

confidence: 99%

“…Once alternatives are defined, a company has the crucial task of selecting the one that is most convenient for implementing the technology solution (Pena et al, 2017a). To choose an alternative, companies commonly compare the alternatives' financial indicators (Brealey et al, 2011;Pena et al, 2017a). Although comparison of alternatives is valuable, it is important to consider the financial indicators at the component level because they include particular financial variables, economic factors, and unpredictable events (Pena et al, 2017a) that support analyses such as comparison of the profitability between components of various alternative solutions (Pena et al, 2017a).…”

Section: Fig 1: Solution Architecture Approachmentioning

confidence: 99%

“…Although there is an extensive literature about cost-benefit models addressed to technology solutions (Apfel and Smith, 2003;Cormier, 2010;Kazman et al, 2002), most of these models are directed at overall IT investments and have a high level of granularity i (Mead et al, 2009;Pena et al, 2017b) that limits the detailed cost-benefit analysis required for solution architectures. Consequently, financial indicators may not accurately indicate valuation due to the omission of specific variables (Mead et al, 2009;Pena et al, 2017b), it may be difficult to identify financial indicators at the component level which could limit comparisons of components (Pena et al, 2017a), and uncertainty at the component level could impact financial indicators. This study defines FINFLEX-CBMC, an innovative cost-benefit model that supports financial analysis of alternatives and solution components in solution architectures while considering uncertainty.…”

Section: Fig 1: Solution Architecture Approachmentioning

confidence: 99%

“…solution's design considers solution architectures from which are derived one or more alternatives that represent different options for the technology solution (Pena et al, 2017a). An alternative has a set of solution components that represent technology functionalities such as information systems (Arango Serna et al, 2015; Pena et al, 2017b), which in turn can have particular variables such as benefits and costs associated with them and that must be considered to calculate the alternative's financial indicators using cost-benefit models (Brealey et al, 2011;Irani et al, 2006;Pena et al, 2017a). Financial indicators are indispensable for determining the feasibility of the technology solution, analyzing its possible risks, and for justifying any investment (Irani et al, 2006;Neufville and Scholtes, 2011).…”

mentioning

confidence: 99%

“…Financial indicators are indispensable for determining the feasibility of the technology solution, analyzing its possible risks, and for justifying any investment (Irani et al, 2006;Neufville and Scholtes, 2011). These financial indicators must consider uncertainties derived from unpredictable events such as changes in requirements to identify positive or adverse consequences of IT investments (Neufville and Scholtes, 2011;Pena et al, 2017a).…”

mentioning

confidence: 99%

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An Innovative Cost-Benefit Model for Analyzing Solution Architectures Considering Uncertainty

Pena¹,

Miranda²,

Correal³

2018

JSSD

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IntroductionSolution architectures are essential for companies to enable value generation and increase the efficiency of processes related to design and implementation of technology solutions (Arango Serna et al., 2015). As Fig. 1 shows, a technology AbstractIn the dynamic environment nowadays, companies require continuously to implement and improve their technology solutions to respond to new technology tendencies, business requirements, and enterprise architecture initiatives. This transformation is supported by solution architectures, which contain solution components that are implemented to respond to company's requirements. As a consequence, the ability to analyze solution architectures financially becomes significantly essential to determine their costs, benefits, profitability, and the impact of the unpredictable events that can derive positive or negative consequences in technology investments. However, since most current financial models address overall IT investments, it is difficult to calculate the detailed and precise financial indicators required for solution architectures and their components. Consequently, financial variables can be omitted, and financial indicators can be limited and insufficient to analyze advantages, disadvantages, and risks associated with solution architectures and their components. With this in mind, our study presents an innovative cost-benefit model specifically for solution architectures. To define, design and evaluate our model, we adopted the Design Science Research paradigm. As a result of the model's evaluation, we determined that our model calculates specific indicators related to alternatives and components which can reduce the risk omitting of variables while increasing flexibility for comparing alternatives and provision of support for technology investment decisions.

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Section: Fig 1: Solution Architecture Approachmentioning

confidence: 99%