Title
Rental software valuation in IT investment decisions
Abbreviated Journal Title
Decis. Support Syst.
Keywords
options; capital budgeting; information technology investment; application service providers; Stochastic processes; risk analysis; CORPORATE LIABILITIES; OPTIONS ANALYSIS; VARIANCE; Computer Science, Artificial Intelligence; Computer Science, Information; Systems; Operations Research & Management Science
Abstract
The growth of application service providers (ASPs) is very rapid, leading to a number of options to organizations interested in developing new information technology services. The advantages of an ASP include spreading out payments over a contract period and flexibility in terms of responding to changes in technology. Likewise, newer risks are associated with ASPs, including pricing variability. Some of the more common capital budgeting models may not be appropriate in this volatile marketplace. However, option models allow for many of the quirks to be considered. Modification of the option pricing model and an analytical solution method incorporated into a spreadsheet for decision support are described and illustrated. The analytical tool allows for better decisions compared to traditional value analysis methods which do not fully account for the entry and exit options of the market. (C) 2003 Elsevier B.V. All rights reserved.
Journal Title
Decision Support Systems
Volume
38
Issue/Number
1
Publication Date
1-1-2004
Document Type
Article
Language
English
First Page
115
Last Page
130
WOS Identifier
ISSN
0167-9236
Recommended Citation
"Rental software valuation in IT investment decisions" (2004). Faculty Bibliography 2000s. 4805.
https://stars.library.ucf.edu/facultybib2000/4805
Comments
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