Evaluating IT Investment Using a Hybrid Approach of Fuzzy Risk Analysis and Real Options

Author

Chen, Tao ; Zeng, Yurong ; Wang, Lin ; Zhang, Jinlong

Author_Institution

Huazhong Univ. of Sci. & Technol., Wuhan

Volume

1

fYear

2007

fDate

24-27 Aug. 2007

Firstpage

135

Lastpage

139

Abstract

Real option valuation is a useful alternative approach for evaluating IT investment in uncertain environment. However, utilizing this method in practice would be a challenging task, because it is usually difficult to obtain a precise estimation on several required parameters. This paper develops a new methodology for valuating IT investment based on real options and fuzzy risk analysis. Fuzzy sets theory is able to well formulate the uncertainty of the expected payoffs from an investment, and then help decision makers make better valuation and justification of the target investment without complex mathematical calculation.

Keywords

DP management; cost accounting; fuzzy set theory; investment; risk analysis; IT investment evaluation; fuzzy risk analysis; fuzzy set theory; real option valuation; uncertain environment; Cost accounting; Decision making; Environmental management; Fuzzy set theory; Investments; Risk analysis; Risk management; Security; Stochastic processes; Uncertainty;

fLanguage

English

Publisher

ieee

Conference_Titel

Fuzzy Systems and Knowledge Discovery, 2007. FSKD 2007. Fourth International Conference on

Conference_Location

Haikou

Print_ISBN

978-0-7695-2874-8

Type

conf

DOI

10.1109/FSKD.2007.276

Filename

4405904