Evaluating Information Technology Investment Under Multiple Sources of Risks

Information technology investments are characterized by the nature of high risk level. Despite enormous expenditure of IT applications in most organizations, the relationship between IT investment value and risk factors have rarely been fully explored. This paper develops a comprehensive methodology, which has incorporated risk assessment and real options analysis, to evaluate IT investment that are subject to multiple sources of uncertainties. Applying this method in practice would help managers make better decisions on IT investment in an uncertain environment.