Towards a financially Optimal Design of IT Services

The current financial crisis forces companies to allocate IT budgets more effectively and thus increases the demand for suitable methods to evaluate the financial impact of IT investments. This especially applies to service-orientation, a design paradigm which facilitates the standardisation and flexibilisation of business processes and IT applications, topics that currently are very much in vogue in science and practice. This paper focuses on the realisation of a new functionality by IT services and presents a methodology to determine their financially optimal functional scope on the continuum between realising just one IT service providing the whole functionality and realising many IT services each providing only a small share of functionality. This approach allows for a multi-period financial valuation of an uncertain demand for the new functionality, as well as of an uncertain company-wide reuse of the corresponding IT services. Finally, the methodology is evaluated by an example from a financial services provider.