Valuation of Information Technology Investment Using the Discounted Cash Flow and Real Options Analysis: A Case Study of Unified TICARES in PT.Telekomunikasi Indonesia
Abstract: PT.Telekomunikasi Indonesia
(Telkom) planned to
develop an IT-based
integrated Customer Relationship
Management (CRM) system called Unified Telkom Integrated Customer Care System,
or Unified TICARES, in 2012 as a part of corporate strategic initiatives. The
key question is whether the value of this investment is truly feasible for the
company. The purpose of this research is to provide an IT-based investment
valuation analysis using two approaches, namely the discounted cash flow (DCF)
and real options analysis (ROA). It compares the results to find out whether different
approach will arrive to different conclusions about the investment feasibility.
The finding result from both approaches show that Unified TICARES is a
promising investment, indicated by positive NPV. However, the result with ROA
did not show much difference against the DCF approach. It indicates that the
use of ROA is not always necessary to value an investment due to its
complexity. The usefulness of ROA will be visible in valuing investments that
involve complex configurations. ROA is also required when DCF is not sufficient
to provide quantitative judgment on project that subject to high risk and
uncertainty.
Author: Lely Triastiti, Achmad Herlanto Anggono
Journal Code: jpmanajemengg120019
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