Using Dempster-Shafer theory and real options theory to assess competing strategies for implementing IT infrastructures: A case study

Authors:
Cokky Hilhorst;Piet Ribbers;Eric van Heck;Martin Smits
Affiliations:
Tilburg University, P.O. Box 90153, 5000 LE Tilburg, The Netherlands;Tilburg University, P.O. Box 90153, 5000 LE Tilburg, The Netherlands;RSM Erasmus University, P.O. Box 1738, 3000 DR Rotterdam, The Netherlands;Tilburg University, P.O. Box 90153, 5000 LE Tilburg, The Netherlands
Venue:
Decision Support Systems
Year:
2008

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Abstract

This paper discusses the selection of a preferred strategy for implementing an IT infrastructure from a range of competing alternatives. The model presented here combines the use of an evidential reasoning approach based on the Dempster-Shafer theory of belief functions with real options analysis. We discuss the combined use of both theories and show that combining the Dempster-Shafer theory with real options analysis provides flexible support that takes account of the multi-dimensional nature of implementation decisions. We also go into the fundamental requirements that need to be met when selecting a strategy for implementing an IT infrastructure. We conclude by outlining a number of the model's limitations.