Optimal Valuation and Timing of Price Benchmarks for IT Services Contracts

Information technology (IT) services contracts often contain provisions for benchmarking fixed prices to current market prices. Prices of IT services tend to be opaque, but can be revealed through third-party benchmarks. Little research has been conducted on the value and timing of such benchmarks. We draw upon the theory of mortgage refinance and value-at-risk analysis from financial economics, and the IT investment under uncertainty literature to create a model of the benchmarking decision for IT services contracts. Our model permits the determination of the value and optimal timing of the benchmark. We provide conditions under which a client firm should consider one or multiple benchmark provisions. Our solution is robust to uncertainty surrounding benchmark forecasts. Firms can leverage market price uncertainties and exercise benchmarks even when the potential rate of declining IT prices does not reach a minimum threshold to benchmark

Our Cities as Economic Engines

Focusing on newly released data from the Bureau of Economic Analysis, Sougstad and Abrahamson unpack the trends and look at Rapid City and Sioux Falls in the context of the northern Great Plains region

Value-at-Risk in IT Services Contracts

solutions become increasingly service-driven, managers are faced with the task of choosing parameters such as servicelevels, pricing, and contract duration. Information technology (IT) services vendors manage portfolios of contracts in which parameters, decided at inception, are often subject to future risks. The contract profit maximization decision may adversely affect the risk position of the firm’s portfolio of services contracts. We propose a model to inform vendors on setting optimal parameters for IS contracts subject to acceptable levels of risk. The analytic model presented draws from IS economics research and the principles of value-atrisk (VaR) from financial economics. We provide examples which illustrate the trade-offs of profit maximizing contractual decisions to portfolio profit-at-risk (PaR). The contribution of this research is the application of VaR analysis to IS contractual decisions and the conceptualization of an economic model of IS service contracts which embeds value-atrisk constraints

Value-at-Risk in Services-Oriented Systems and Technology Investments: A Framework for Managing Project Portfolio Uncertainties

Sei X(t) ein stochastischer Prozeß, z.B. sei X(t) die Koordinate eines Teilchens, das einer zufälligen Bewegung auf einer Geraden unterworfen ist, zur Zeit t. Die bedingte Wahrscheinlichkeit, das Teilchen zur Zeit t im Intervall [ a, b ] zu finden, wenn man weiß, daß es zur Zeit s 0, und P(x,y,t$_{1}$ + t$_{2}$) = $\int$P(x,z,t$_{1}$) P(z,y,t$_{2}$) dz für t$_{1}$, t$_{2}$ > 0. [...

An Interdisciplinary Perspective on IT Services Management and Service Science

The increasing importance of information technology (IT) services in the global economy prompts researchers in the field of information systems (IS) to give special attention to the foundations of managerial and technical knowledge in this emerging arena of knowledge. Already we have seen the computer science discipline embrace the challenges of finding new directions in design science toward making services-oriented computing approaches more effective, setting the stage for the development of a new science—service science, management, and engineering (SSME). This paper addresses the issues from the point of view of service science as a fundamental area for IS research. We propose a robust framework for evaluating the research on service science, and the likely outcomes and new directions that we expect to see in the coming decade. We emphasize the multiple roles of producers and consumers of services-oriented technology innovations, as well as value-adding seller intermediaries and systems integrators, and standards organizations, user groups, and regulators as monitors. The analysis is cast in multidisciplinary terms, including computer science and IS, economics and finance, marketing, and operations and supply chain management. Evaluating the accomplishments and opportunities for research related to the SSME perspective through a robust framework enables in-depth assessment in the present, as well as an ongoing evaluation of new knowledge in this area, and the advancement of the related management practice capabilities to improve IT services in organizations