Bilişim Teknolojisi Projelerinde Reel Opsiyonlar (Real Options in Information Technology Projects)

Abstract

Many sources such as the immaturity, complexity and unpredictable evolution of the technologies themselves, and the difficulty of predicting the market demand generally cause uncertainty in the Information Technology (IT) projects. Managerial flexibility has value in the context of uncertain IT projects, as management can continuously gather information about uncertain project and market characteristics and, based on this information, change its course of action. As traditional capital budgeting (or project appraisal) approaches fail to consider embedded managerial flexibility in projects, the new investment evaluation approach called “real options” has come on the scene recently. “Options thinking,” an emerging investment management philosophy based on the theory of financial options can provide a promising foundation for hedging the risks under uncertainty. This paper aims at analyzing a real IT investment having growth opportunities by using real options approach. Specifically, the value of investing in a software project as well as embedded flexibility in this opportunity is modeled as an option contract. The expected costs required for completing the project and thereafter the resulting asset value are considered as the base-case parameters of this contract. Option values derived from Binomial method are used for evaluating the project and the optimal investment policy is determined based on these values. As a result, it is shown that the value of an IT project having flexibility can differ from one obtained with traditional capital budgeting methods and a rejected project which was seen as unprofitable before can turn a profitable one through embedded flexibilities.

Keywords

• Reel Options
• Information Technology Investments
• Software Projects
• Risk Management