Real Options in Enterprise Architecture: A Holistic Mapping of Mechanisms and Types for Uncertainty Management
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Mikaelian_draft_IEEETEM.pdf
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Author(s)
Mikaelian, Tsoline
Nightingale, Deborah J.
Rhodes, Donna H.
Hastings, Daniel E.
Date Issued
March 2011
Journal
IEEE Transactions on Engineering Management
Publisher
Institute of Electrical and Electronics Engineers (IEEE)
Citation
Mikaelian, Tsoline et al. “Real Options in Enterprise Architecture: A Holistic Mapping of Mechanisms and Types for Uncertainty Management.” IEEE Transactions on Engineering Management 58.3 (2011): 457-470. © 2010 IEEE
Version
Author's final manuscript
Abstract
Uncertaintymanagement is crucial for achieving high
performance in enterprises that develop or operate complex engineering
systems. This study focuses on flexibility as a means
of managing uncertainties and builds upon real options analysis
(ROA) that provides a foundation for quantifying the value of
flexibility. ROA has found widespread applications ranging from
strategic investments to product design. However, these applications
are often isolated to specific domains. Furthermore, ROA is
focused on valuation, rather than the identification of real options.
In this paper, we introduce a framework for holistic consideration
of real options in an enterprise context. First, to enable a holistic
approach, we use a generalized enterprise architecture framework
that considers eight views: strategy, policy, organization, process,
product, service, knowledge, and information technology (IT). This
expands upon the classical IT-centric view of enterprise architecture.
Second, we characterize a real option as a mechanism and
type. This characterization disambiguates among mechanisms that
enable flexibility and types of flexibility to manage uncertainties.
Third, we propose mapping of mechanisms and types to the enterprise
architecture views.We leverage this mapping in an integrated
real options framework and demonstrate its benefit over the traditional
localized approach to ROA.
MIT Department
Massachusetts Institute of Technology. Department of Aeronautics and Astronautics
MIT Sociotechnical Systems Research Center
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Creative Commons Attribution-Noncommercial-Share Alike 3.0
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DOI of Published Version
https://doi.org/10.1109/tem.2010.2093146
