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Real Options and IT Platform Adoption.

Real Options and IT Platform Adoption. By Robert G. Fichman Presented by: Dominic Almeida Da Silva. Introduction. “The pace of change in the information Technology Field has been rapid over the past decade, with a host of promising new technologies confronting forward looking organizations.”.

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Real Options and IT Platform Adoption.

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  1. Real Options and IT Platform Adoption. By Robert G. Fichman Presented by: Dominic Almeida Da Silva

  2. Introduction • “The pace of change in the information Technology Field has been rapid over the past decade, with a host of promising new technologies confronting forward looking organizations.”

  3. Real Options needs and difficulties • Uncertainty in benefits • Irreversibility • Training • Infrastructure • Managerial flexibility (Dynamic) • Process • Result

  4. Real Options give us • Give us the right but not the obligation to • Benefits • Growth options • Positioning investments • Other possible Real Options • Prolonging the undertaking of a “Real option” • Delays benefits associated with it • Often prolonging adoption gives no benefits

  5. Six Criteria of “Real Options” • 1. Net Payoffs resulting from follow on project • 2. Asymmetric negative and positive payoffs • 3. Redirecting away from negative payoffs

  6. Six Criteria of “Real Options” • 4. Value of the option increases with increasing expected value of potential value • 5. Value of the option increases with increasing variance of potential payoffs • 6. Increases in managerial flexibility increase the value of the option

  7. Where do “Real Options” come from? • Technology strategies • Organizational learning • Innovative bandwagons • Technology Adaptation

  8. Real Options

  9. Technology strategy perspective • Radicalness • Strategic importance of affected products or processes • Sustainability of advantage • Innovative capabilities

  10. Technology strategy perspective

  11. Organizational learning perspective • Knowledge Barriers • Learning related environments • Contributions to exploitable absorptive capacity

  12. Bandwagon perspective • Susceptibility to network externalities • Prospects for network dominance – Class • Prospects for network dominance - Instance

  13. Adaptation perspective • Interpretive flexibility • Divisibility

  14. Real Options • Is his model new? • Are there any “Real Options”?

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