Abstract

IT Portfolio Management is increasingly becoming an important topic of research in IS/IT. The number of IT projects in a company can number in the hundreds, and it is difficult for upper level executives to manage this portfolio effectively without using some guiding methodology. This paper focuses on one such methodology that is being developed by a Fortune 100 company. Although many excellent papers have discussed using Real Options in the valuation of IT, there has been relatively little work in using Real Options in the IT Portfolio management context. Furthermore, most of the papers in the main IS journals have used relatively simple option models to evaluate (1) a single investment decision (2) assuming independence between projects. The focus of this paper is on a company that is actually managing IT portfolios of projects, and on some issues that may make exotic option models and more appropriate valuation tools.

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