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Supplier Portfolio Management for IT Services Considering Diversification Effects

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  • Florian Probst
  • Hans Buhl

Abstract

By means of service-oriented architectures the IT support of processes can be designed as a portfolio of individual IT services provided by different suppliers. The processes are designed based on selection decisions between IT services that potentially have to be included. Many companies formulate a multitude of requirements for investments in IT services at ever shorter intervals. However, the scope of the desired investments usually exceeds the available budget. Thus, companies face the challenge of allocating the limited budget to investments in the most promising combination of IT services. This is hardly possible without methodical support. In addition, the allocation is often done intuitively and subject to the decision-makers’ affinity with IT. Therefore, this paper develops a quantitative, multi-period procedure model for the purpose of maximizing the enterprise value in accordance with value based management, which considers the dependencies of the periodical selection decisions. In the following, a decision logic for the heuristic solution to the selection problem is presented and its application is demonstrated by means of an illustrative case example. Copyright Gabler Verlag 2012

Suggested Citation

  • Florian Probst & Hans Buhl, 2012. "Supplier Portfolio Management for IT Services Considering Diversification Effects," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 4(2), pages 71-83, April.
    • Handle: RePEc:spr:binfse:v:4:y:2012:i:2:p:71-83
    DOI: 10.1007/s12599-012-0203-y
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    References listed on IDEAS

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    1. Ian Jewitt, 1989. "Choosing Between Risky Prospects: The Characterization of Comparative Statics Results, and Location Independent Risk," Management Science, INFORMS, vol. 35(1), pages 60-70, January.
    2. Hans Buhl & Maximilian Röglinger & Stefan Stöckl & Kathrin Braunwarth, 2011. "Value Orientation in Process Management," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 3(3), pages 163-172, June.
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    4. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
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    Cited by:

    1. Christoph Dorsch, 2015. "On the Sound Financial Valuation of Flexibility in Information Systems," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 57(2), pages 115-127, April.
    2. Hans Ulrich Buhl & Björn Steven Häckel & Florian Probst & Josef Schosser, 2016. "On the Ex Ante Valuation of IT Service Investments," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 58(6), pages 415-432, December.
    3. Josef Schosser, 2020. "Real Option Exercise Decisions in Information Technology Investments: a Comment," SN Operations Research Forum, Springer, vol. 1(4), pages 1-7, December.
    4. Martin Stange & Burkhardt Funk, 2014. "Real-Time Advertising," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 6(5), pages 305-308, October.

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