Application of real options analysis to technology portfolio planning: a case study

摘要

Purpose--The concepts of real options analysis, which transfer options analysis for financial investments to those involving real properties, such as land and plant facilities, have already existed for 30 years. However, the actual application of real options analysis to technology portfolio planning has not been as widespread as expected. Among others, a major barrier to such applications appears to be a lack of appreciation and acceptance of real options by technology executives. This case study aims to present a successful application experience of real options analysis to technology portfolio planning and highlights the lessons learned in overcoming such lack of acceptance and other barriers. Design/methodology/approach--The paper uses a case study approach. The methodology focuses on describing the key issues and solutions for applying real options analysis in the technology portfolio-planning process of a company. Findings--The findings in this paper showed that considerable barriers exist in the acceptance of real options analysis for technology portfolio planning. However, the experience in the case study provides successful approaches for overcoming these barriers. Originality/value--The paper shows that few studies are available on the difficulties of introducing real options analysis in practical applications. This paper provides a valuable case study for such applications.