The following information was submitted:
Transactions: INTERNATIONAL JOURNAL of SYSTEMS ENGINEERING, APPLICATIONS AND DEVELOPMENT
Transactions ID Number: 19-590
Full Name: Teruji Sekozawa
Position: Professor
Age: ON
Sex: Male
Address: 3-27-1 Rokkakubashi,Kanagawa-ku, Yokohama 221-8686
Country: JAPAN
Tel: +81-45-481-5661
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E-mail address: sekozawa@ie.kanagawa-u.ac.jp
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Title of the Paper: The Real Options for Adaptability to Environmental Change in Enterprise Resource Planning Systems
Authors as they appear in the Paper: Teruji Sekozawa, Jun Nakagane
Email addresses of all the authors: sekozawa@ie.kanagawa-u.ac.jp
Number of paper pages: 8
Abstract: This paper discusses the options for adaptability to environmental change inherent in Enterprise Resource Planning (ERP) systems, the value of these options, and methods to asses the ERP value. The first point of discussion is the issue of ascertaining the effectiveness of ERP, an underlying asset. We divide the effectiveness into two types—effectiveness in actually generating cash and effectiveness confined to opportunity cost reduction—and propose a method for calculating the ERP value effective in generating cash. In this paper, we provide as Case Study 1 a specific proposal for ascertaining effectiveness through the valuation of ERP introduction and of the Electronic Data Interchange (EDI) function realizable as a result of ERP introduction. The second point of discussion is the valuation of information systems in the context of business acquisition and divestiture. Although business acquisition and divestiture is another unavoidable topic for corporate mana!
gement, information system valuation has not been discussed in that context. We present a valuation method for the purpose of including information systems in divestment value, something not considered heretofore, to reveal the potential value of information systems in corporate management. In Case Study 2, we take up the divestiture of a certain business site. Calculation of the market price of an information system in such circumstances indicates the practicality and effectiveness of applying option valuation to information systems.
Keywords: ERP system development, Investment valuation, Opportunity cost, Real options
EXTENSION of the file: .doc
Special (Invited) Session: The Application of Real Options to ERP Investment Valuation
Organizer of the Session: 635-217
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