The Value of IT-Enabled Business Process Standardization from the Real Options Perspective.

• Main Authors: Dai, Q., KAUFFMAN, Robert John, Wang, B.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2011
• Subjects: Business processes; IT value; real options; standardization; valuation; volatility; Computer Sciences; E-Commerce
• Online Access: https://ink.library.smu.edu.sg/sis_research/2715
• Institution: Singapore Management University

IT-enabled business processes support firm agility, and business process standardization has become an essential part of IT architecture. Business process standardization value partly comes from the real options such projects enable. Drawing from research on real options and IT value, we propose that business process standardization initiatives create real options. We further propose that the value of such IT-enabled real options increases with market volatility, and differs between primary and support business processes. We collected data from the Lexis-Nexis, Compustat and CRSP databases to explore some of these issues. We offer a number of empirical findings: (1) ITenabled business process standardization enhances firm growth potential; (2) the option value of such initiatives is higher when market volatility is higher; and (3) primary business process standardization projects yield greater option value.