Combining real options and multiattribute decision analysis to define the favourable

IT infrastructure implementation projects have to deal with many uncertainties and risks. A favourable implementation strategy therefore needs to reduce uncertainties and risks with regard to the IT infrastructure investment. The complexity in these type of decisions relates to the fact that different types of uncertainties and risks and quantitative and qualitative information need to be incorporated in a sound, transparent and pragmatic way. In this paper a decision making model for defining a favourable implementation strategy is introduced. The approach integrates the utility based evidential reasoning approach for multiattribute decision analysis (MADA) with real options analysis. Using real data from a public organization, the analysis framework is used to guide an investment decision for a large multi-staged, cost reduction IT infrastructure implementation. We compare the presented framework with the net present value analysis, the real options analysis, and the MADA framework. The paper concludes on how the presented approach can be used to improve the evaluation of IT infrastructure implementation strategy decisions and discusses the implications for further research.