Valuation of Complex Options in Software Development
نویسنده
چکیده
Embedded strategic flexibility may have a significant impact on the net worth of a software development project. Disregarding the additional value of flexibility may make a project look less attractive than it actually is. In this position paper we show how strategic flexibility in software projects can be valued in a practical and methodical manner using the concept of real options. The valuation method relies on the identification of two basic kinds of constructs for composing options: staggering and nesting. These two constructs allow the formulation and valuation of a complex strategic scenario as a portfolio of real options. We motivate the work with several examples of options found in software development involving COTS components.
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