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Title: A real option theoretic fuzzy evaluation model for enterprise resource planning investment
Authors: You, Chew Jian
Chen, S. L.
Jiao, Roger J.
Lee, C. K. M.
Keywords: DRNTU::Engineering::Mechanical engineering
Issue Date: 2012
Source: You, C. J., Lee, C.K.M., Chen, S.L., & Jiao, R. J. (2012). A real option theoretic fuzzy evaluation model for enterprise resource planning investment. Journal of engineering and technology management, 29(1), 47-61.
Series/Report no.: Journal of engineering and technology management
Abstract: The high failure rate of ERP implementation is due to a common pitfall that ERP projects are often enacted as merely investment into installation of IT infrastructure, rather than systematic planning of operation changes, business process re-engineering and a paradigm shift for the operation and management. To manage ERP investment in a changing environment for high payoff, this paper adopts a real option theoretic method. Fuzzy payoff valuation is introduced to deal with uncertainties in order to minimize the risk of failure. The proposed ERP evaluation model is geared towards small and medium enterprises. A case study is presented to validate the proposed fuzzy real options. The results indicate the potential of modeling ERP investment as “Expand”, “Contain” and “Abandon” options in different scenarios. The fuzzy real option model bestows a novel ex-ante cost analysis for justifying ERP investment in the implementation cycle.
ISSN: 0923-4748
DOI: 10.1016/j.jengtecman.2011.09.005
Fulltext Permission: none
Fulltext Availability: No Fulltext
Appears in Collections:MAE Journal Articles

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