Evaluating future IT-investment options through technology debt -A case study and theory testing approach on Company AB

摘要

Background and problem: Due to the increasing investments in Information Technology (IT) a largerportion of companies experience consequences of past decisions. IT-systems are not always easilyreplaced due to their critical functions. This causes path dependency and potential lock-in(s), whichcauses problems for a future decision-maker. A recently proposed theory takes this into account andproposes a method for evaluating technology related investments. This thesis aims to provide a theory testthrough a case study in order to identify its possible applicability on future investments, regarded as realoptions.The thesis is thus guided by the following research question (RQ):RQ: How can technology debt be used when a company evaluates future IT-investment options?Objective: The objective with this thesis is to test the theory of technology debt on future IT-investmentsin a company, and evaluate its usability. Three clear questions arose that needed research to carry out theobjective: How can technology debt be applied to future IT-investment options? How can technology debtsupport the choice between future IT-investment options? How is technology debt relevant to decisionmakerswhen facing IT-investment options?Method: In order to answer the three questions above, three studies were carried out. The purpose ofstudy 1 was to answer: How can technology debt be applied to future IT-investment options? In order toaccomplish this, an expansion of the original framework was conducted. Study 2 operationalized theresults from study 1 through a case study on a company’s two possible future IT-investments. Thepurpose of the case study was to examine if technology debt could be used to support the choice betweenfuture IT-investments option. The case study involved nine qualitative interviews on a company’s staff inorder to pinpoint the consequences on future decisions. The results from study 2 were subsequentlyevaluated through study 3. A discussion with the company’s CFO/CIO was conducted with the purpose tosee if technology debt is relevant to decision-makers when facing IT-investment options.Results: Study 1, the theory of technology debt can be applied on future IT-investments throughcategorization and measurement of future lock-ins. Study 2, different future IT-investments can becompared using real-option theory, where each IT-investment’s technology debt is measured. The optionthat gives the highest future maneuverability should be recommended because this option results in thelowest amount of future (switching-) costs. Study 3, technology debt is relevant to decision-makers as it isable to capture the long-term effects in terms of future lock-ins for a future decision-maker, and serve as acomplement to other measurements, such as implementation costs etc.