Real options, learning cost and timing software upgrades: Towards an integrative model for enterprise software upgrade decision analysis

A key challenge facing information technology (IT) managers is how to carefully analyze the decision options available to them when considering enterprise software infrastructure upgrades. We present an illustrative case that not only captures the trade-offs involved in retaining an existing software infrastructure as opposed to adopting a new one at an appropriate time, but also demonstrates how the combined application of various analytical tools including real options analysis may provide richer information than a single approach. Our model offers IT managers the potential to arrive at a deeper understanding of software upgrade timing decisions while generating important information relevant to practical decision situations.