The Value of IT-Enabled Business Process Standardization from the Real Options Perspective.
IT-enabled business processes support firm agility, and business process standardization has become an essential part of IT architecture. Business process standardization value partly comes from the real options such projects enable. Drawing from research on real options and IT value, we propose that business process standardization initiatives create real options. We further propose that the value of such IT-enabled real options increases with market volatility, and differs between primary and support business processes. We collected data from the Lexis-Nexis, Compustat and CRSP databases to explore some of these issues. We offer a number of empirical findings: (1) ITenabled business process standardization enhances firm growth potential; (2) the option value of such initiatives is higher when market volatility is higher; and (3) primary business process standardization projects yield greater option value.
Business processes, IT value, real options, standardization, valuation, volatility
Computer Sciences | E-Commerce
Information Systems and Management
Exploring the Grand Challenges in Next Generation E-Business
Sharman, R.. Rao, H.R., Raghu, T.S.
City or Country
New York, NY
Dai, Q.; KAUFFMAN, Robert John; and Wang, B..
The Value of IT-Enabled Business Process Standardization from the Real Options Perspective.. (2011). Exploring the Grand Challenges in Next Generation E-Business. 160-165. Research Collection School Of Information Systems.
Available at: http://ink.library.smu.edu.sg/sis_research/2715