Abia University, Uturu,absudbfjournals.com/wp-content/uploads/2017/08/...As DCF analysis is based on...

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Valuation ProblemsInnovative technologies have always influenced market trends, because technological progress hasan impact on productivity and increased productivity usually causes earnings to rise which in turn is. in most cases rewarded by capital markets. However, volatile stock markets have shown thedifficulties assessing a "true" underlying value to new technologies. The goal of all valuationefforts is to determine a price as close to the "true" or "fair" value as possible. In this context,"price" and "value" must be distinguished. A theoretical price of a company can be determinedusing valuation approaches like the discounted cash flow (DCF) method or the comparablecompanies (CC) approach while the true price can be observed in capital markets. If markets areefficient (Le. all available information is considered), valuation based on trading multiples ofcomparable companies can reflect current trends and growth expectations. However, due tounavailable or unpredictable information (e.g. future market development) frequently neither prices

Business and information systems (IS) executives continue to grapple with issues of risk ariduncertainty in evaluating investments in information technology (IT) Despite the use of net presentvalue (NPV) and ether investment appraisal techniques, executives are often forced to rely oninstinct when finalizing IT investment decisions (Tau des et al; 1996, Tallon et al; 2002:136). ISvaluation has long been a core IS research challenge. Recently, real options methods or mode is(ROMs) also known as real options approaches (ROA) have received attention as methodologicalmeans of overcoming some shortcomings of traditional valuation approaches like NPV, especiallycoping with uncertainties concerning: (J) the costs and benefits (value) of IS infrastructureflexibility, (2) the costs and benefits implied by postponing IS investments ("option" to investlater), (3) the costs and benefits of partial investments.

In the paper, the researcher learns from capital markets' experiences about coping withfuture uncertainty: how do capital markets valuate IT companies in theory and practice, and to whatextent can we learn from them concerning the question of the true value underlying informationsystems?

INTRODUCTION

ABSTRACTIn this paper, an analogy between information Technology (IT) business valuation and Information System(IS) valuation is used to learn from how investment banking professionals cope with the renowned valuationproblem. It becomes clear that theoretically sound approaches like the discounted cash flow might beinappropriate to determine the true value of a software company. Especially for IT valuation, real optionsapproaches are a promising way of capturing the "true" underlying value to new technologies.Unfortunately, as expert interviews reveal, the importance of this approach in investment banking practice isnegligible.

AMA, GODWIN AGWU NDUKWE, PhD, CPA, CNA,Senior Lecturer and HOD, AccountancyAbia State University, Uturu,Nigeria.

Phone: +234-803-8211-289E-mail: [email protected]

By

ASSESSING THE ALTERNATIVE MODELS OF VALUING A COMPANY'SINFORMATION SYSTEM: INSIGHTS FROM NIGERIAN CAPITAL MARKETS

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Estimating Cash FlowsThe discounted value of expected future free cash.flows (after taxes and reinvestment needs,

but prior to debt payments) equals the value of operations. In order to estimate the operationincome, some adjustments to the financial statement information are necessary. See table L below.

When estimating the enterprise value of a company, four steps are necessary. First, cashflows representing future expected payouts are determined. Then, a discount rate representingdifferent risk inputs must be assessed. Third, estimating growth is crucial which mostly relics onpersonal know-how and expertise. Finally, a terminal value for the period of stable growth after theexplicit forecasted period has to be determined.

The Discounted Cash Flow (DCF) analysis measures the intrinsic value of any asset as afunction of three variables - how much it generates in cash flows, when these cash flows areexpected to occur. and the uncertainty associated with these cash flows. Precisely, DCF analysisestimates the value of a company as the S,I111 of the present value of its unlevered free cash flowsover a forecast period between five to ten years and a terminal value at the end of this forecastperiod, based on the weighted average cost of capital (WACC) as the discount rate.

In this section, different valuation techniques are introduced. Focus is set on discountedcash flow (OCF) analysis and multiple valuation as these approaches are the most commonly usedby investrnent banks. All valuation methods share four principles: first, they all relate to the future,as investors do not pay for the past. Second, only cash matters. Third, due to uncertainties cashtoday has more value than cash tomorrow. Fourth, the higher the risk, the higher expected returns(Dermine and Wildberger, 2001). Discounted Cash Flow Approach.

determined by valuation approaches nor market prices represent the "fair" value of a company.Mohammed (2001:104) states that during hype phases the analysts' view often is, "We've got anew technology, therefore it's perfectly okay to have a new way of approaching the incomestatement and balance sheet". It seems that traditional valuation methods have reached their limitswhen it comes to determine a financial value for new technologies or high-growth companies.Varian (2001) identifies three technology sector investment shocks in the late 1990s that causedrapid growth and extreme expectations which could not be captured using traditional valuationmethods: telecommunications deregulation in 1996, the "year2K" problem in 1998- I999 and the"dot.com" boom from 1999-2000. Stock price development during this period and the rapiddownturn of technology stocks in 2001 hint that internal value drivers regarding innovation andfuture growth potential are truly a "black box" and are neither fully understood by the capitalmarkets nor completely captured by theoretical valuation approaches.


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Estimating Discount Rates

Discounting estimated cash flows reflects the risk involved. A discount rate describes theopportunity costs borne by equity investors when buying into a company's assets or providingcapital. The opportunity cost weighted by their relative contribution to the company's total capitalis called weighted average cost of capital (WACe) (Copeland et al., 2000: 134).The risk-free rate isthe return on a security that has no default risk and is completely uncorrelated with returns oranything else in the economy (Copeland et al., 2000: 215). In practice, returns for governmentsecurities are applied. The risk premium represents the extra return demanded by an investor forshifting his money from a riskless investment to an average risk investment. The capital assetpricing model (CAP~/l) suggests two kinds of risk premium - the historical and the impliedpremium. The difference is the belief whether markets are efficient. If yes, prices are justified andan implied premium should be used. If no, i.e. if it is assumed that markets are under- or overvaluedand it is believed that future will be like the past, then the historical risk premium should beapplied.

The beta is a relative measure of risk. It measures risk added on to a diversified portfolio,rather than total risk. For example, a beta of 1.5 means tbat if the underlying index changes by onepercentage point, the valued stock changes by 1.5 points. Based on the CAPM, the cost of equityare:re=rf +~(rM :rf., (1)where:P r, = Cost of Equity, rr = Risk free rate, rf - rM= Risk premium, 13 = Beta.To finally determine the WACC, the cost of equity and debt have to be weighted with therespective amount of equity and cash reflecting the firm's capital structure.

Table 1: Determination of free cash flow

IRevenues- Costs of Goods Sold

Cash Operating ExpensesEBITDA (Earnings before interest, taxes, depreciation and amortization)Depreciation and AmortizationEBIT (Earnings before interest and taxes)

-/+ Interest Ex penses / IncomeEBT (Earnings before taxes)TaxesEarnings / Net Income

+ Depreciation+ Non-cash compensation+ Other non-cash operating expenses+ Change in provision

Funds from operations+ Delta Working Capital

Operating Free Cash FlowCapita! ExpendituresAcquisitions

+ Sales of assetsi = free Cash FlowSource: (Damodaran 2001, and Copeland et al., 2000)


-~-- --~~ - --

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If if is assumed that a company's cash flow beyond the terminal year will grow at a constantrate forever, the terminal value can be calculated by dividing the free cash f18\V of a finn by thecost of capital less the constant growth rate (g = terminal growth rate).Terminal Value = Free Cash Flow to FirmT+l

(Cosr of Capital-i. gT) - (4)Formula 4: Terminal value

As especially the software sector is characterized through fast change, often multipleoptions for future strategies occur. The DCF approach does not capture these options.Merits of DCF

As DCF analysis is based on the assumptions of the CAPM, it is an analytically correctvaluation method. In contrast to the Comparable Companies analysis, volatile market conditions do

v;Dot have an impact on the results. DCF therefore- is often used as an additional point of reference.Since the discount rate is usually derived from the WACC, the DCF takes account of the relativeriskiness of the projected cash flow. Accounting rules do not influence this approach, as valuationis based on projected cash flow.Shortcomings

Since the terminal value often represents more than 50% of the entire DCF value it istherefore highly sensitive to the underlying assumptions, especially regarding the growthcomponent in the terminal value and the discount rate. Using historical stock returns whenestimating the beta depends heavily on the choice of the index. For volatile companies the beta isvery high, resulting in a relatively high discount rate and a low net present value of cash flows.

Formula 3: Present value of cash flows

period of stal (3)Growth period

l+(WACC)T

Terminal ValuePresent Value of Free Cash Flows ,;,=t FCF

(=1 l+(ViACC)'

Estimating Firm ValueThe value of a firm consists of the current value of its expected cash flows for a certain growthperiod and the so-called terminal value which often accounts for a large percentage (in most casesmore than 50%) of the total value of a company (Copeland et al; 2000: 267).

Estimating Growth Rates

Estimating growth opportunities involves the difficult task of predicting the futuredevelopment of aspects like technology, financials, management, and markets. Deprie (2001: 141-18 I) suggests that growth rates can be estimated in three different ways: first, historical growthrates can be adapted, acknowledging that the future is a condition of the past. A second way isusing analysts estimates, also suggesting that growth is exogenous. A third way is to see growth asa function of quality and quantity of firm investment. This endogenous approach emphasizes theimportance of the present and bases growth on a firm's fundamentals. It is most commonly used byinvestment banks.

Cost of Equity, rd = Cost of Debt, t = tax rateDebt, r,Equit, DWhere;E

As free cash flows after debt payments are discounted, the debt ratio has to be tax-adjusted:WACC E r, + D rd (1 - t)

(E+D) (D+E) (2)


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Earnings Multiples

The Enterprise Value to Earnings Before Interest, and Taxes (EV IEBIT) ratio and the EnterpriseValue to Earnings Before Interest, Taxes, Depreciation and Amortization (EV/EBITDA) ratio areother multiples often used to value companies:Enterprise Value to EBIT(DA) Ratio =

-fMarket Value of Equity Market Value of Debt - Cash) '" (6)EBIT(DA)

Revenue MultiplesAs infant companies often have no or negative earnings, valuation based on PIE multiples cannotbe assessed. Using revenue multiples is an alternative approach. It is understood that firms hadingat low multiples of revenues are viewed as comparatively cheap. As revenue is less volatile thanearnings and not influenced by accounting decisions, revenue multiples are more reliable. TheEnterpriseValue to Sales (BV/Sales) ratio can be calculated as:Revenues Enterpise Value to Sales Ratio =

(Market Value of Equity -tMarket Value of Debt - Cash) (5)Revenue

Price Earnings RatioOne of the most widely used ratios - the price earnings (PIE) ratio - compares th : current stockprice of a company with its earnings per share. The underlying idea behind PIE ratios is that highPiE ratios imply investors' belief ill above average growth opportunities and relatively safeearnings for the firm. However, companies carr also have a high PIE ratio not because the price ishigh but because the earnings are low(Bidemi, 1996:72).Empirical studies fOU!1dthe precision of PIE ratios to increase when ising companies with similarhistoric earnings growth rates, instead of considering the same industry classification (Boatsmenand Baskin, 1981). Amobi (1992:S0) finds that adjustments in risk, growth differences, or inleverage do not lead to an improvement of valuation. Confirmed by Liu, et al., (2000), who.conclude that a focus on the same industry classification is of utmost importance. According toKekere (1999:102), multiples have only modest predictive ability because of the variations of theseratios within all industry. They prove that PIE multiples using forecasted instead of historicearnings result in much more precise valuations.

Comparable Companies Model

Relative valuation using comparable companies aims to value assets based OIl the marketprice of similar companies (Bidemi, 1996:28; Damodaran, 2001 :25-27). The quality of the CCapproach is based on the selection of the peer group. Comparable companies must belong to thesame industry and thereby offer similar products and do business in similar geographical markets.'The size of the companies in terms of revenues and market capitalization must be comparable aswell as capital and ownership structure.

Estimating a "correct" value by applying the DCF MODEL therefore, depends to a large extend onthe expertise and industry knowledge of the person doing the valuation. Moreover, the DCFapproach neither considers different management options nor future investment opportunities. Itonly works if cash flows are subject to little uncertainty and the company is managed by a staticmanagement team. It does not capture the "true" value if there are large initial losses, highlyvolatile earnings or immense initial growth rates.


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Source: Benninga and Sarig (1997)

The Real Options ModelThe premise underlying the application of the real options model(ROM) is the challenge of anuncertain future. Tajudin (2000: 17) points out that the business strategy of a company resembles aseries of options rather than a single projected cash flow. Options imply uncertainty and thesealternatives can be captured with the help of the ROM. Hommel (2000) states that disregardingmanagement flexibility leads to a systematic undervaluation of companies. As Chuka (2000:399)states, ROM captures the value of this flexibility. The value determined using DCF does notdifferentiate between possible scenarios (e.g. successful product launch, development of an

activity- Result reflects what the market

"tells" no matter if it is right orJ'wrong

companies- Trading valuation may be affected

by thin trading activities or smallcapitalization

- Stock prices influenced by M&A

- Appropriate for mature businesses I-i 'vi~h strong and stable cash flows1-:-------;

Comparable - Based on public informationCompanies - Market efficiency ensures that

results reflect industry trends,risks, growth potential

- Value obtained does not include acontrol premium

- Valuation is highly sensitive to,'underlying assumptions for cashflow, terminal value and discountrate

Terminal value representssignii'i~ant part of total value

- Difficult to find truly comparable I

- The most theoretically soundmethod- Not influenced by temperamental

market conditions

DCF

II

I

DemeritsMeritsModel

Table 1.Merits and demerits of DCF and the CC models

Merits and Demerits of Valuation ModelsTable 1 provides an overview of the merits and demerits of the DCF and comparable companiesmodel as discussed before. Some of the demerits of the DCF and CC models can be overcome byapplying the real options model (ROM).

ShortcomingsThe simplicity of valuation by multiples is its deficiency (Benninga and Sarig, 1997 :305). Since novalue determinants are analyzed, it is important to carefully select comparable companies. Also,outside variables like mergers and acquisitions in the respective sector can influence stock prices.Figures often tail to capture intangible assets, like quality of management. Hence, CC basedvaluation should provide a valuable "sanity check" to assure the validity of a DCF analysis, but itshould not be the only valuation mode! used (Benninga and Sarig 1997:305).

AdvantagesAs the comparable companies method is based on public information, market moods andperceptions are reflected, since it measures the relative and not the intrinsic value. Relativevaluation is based upon fewer assumptions and can be conducted faster than DCF valuation.

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Source: Liu (2000)

I-. I Variable I Call OptionInvestment Opportunity

I Present of FCF1 L-.-____.._.._.___~ __.___

s I Stock PriceExpenditure required to X I Exercise Priceacquire respective assets.Length of time the decision I T Time to expirationmay be deferredTime value of money Rt Risk-free rateRiskiness if respective (J~ Variance of returnsassets

Table 2. Link between investment opportunities and Black-Scholes inputs

Where; T = expected life options in years

o = variance of the underlying security

The Black-Scholes FormulaIn 197? Black and Scholes presented heir model for valuing dividend-protected European options(which can only be exercised 0:1 the expiration date). They used a portfolio composed of theoptions' underlying assets and a risk-free asset with the S::Hn~ cash flow as the option being valuedto arrive at their formula. This portfolio is called 'replicating portfolio' (Damodaran, 1996:250-262and Mauboussin, 1999).Companies can be valued using the Black-Scholes formula by mapping the relevant cash flow ontothe Black-Scholes parameters . The remaining parameters are estimated based on similarcompanies.Value of Call =Se(b-r)tN(d! ) xc--rT Ned: ) (7)Where;S = stock price of underlying stock, X = strike of the option, R = risk free rate, B = 'cost ofcarry', defined :15 risk

Real Options Defined .The real options approach employs the financial option theory based on the Black-Scholes formula(Mauboussin, 1999). The idea of options pricing is that an option provides the holder with the right,but not the obligation, to sell or buy 2. specified quantity of an underlying asset at a fixed price,called the strike price. A call (put) option gives the buyer the right to buy (sell) the underlying assetat the strike price any time prior to the expiration date of the option (Damodaran, 2001: 354-356).

innovative technology, failure of an innovation). Especially software design and sourcing strategiesare largely processes of decision-making under uncertainty, including the threats of competitiveentries (Sullivan et aI, 1999), making ROMs well suited to be applied when valuing softwarecompanies or IS strategies.


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Status Quo Science versus Practical ImplementationROM is investment bankingDespite growing public and academic interest, the practical relevance of ROM seems to be small.To understand the reasons behind this discrepancy, the author conducted extensive personalinterviews with investment bankers from Nigeria. According to them, the ROM is in fact not yetbeing applied there. Due to its complexity and the problems arising when estimating the underlying

ShortcomingsAs practical knowledge about how to use the ROM is not yet widespread, and as this is a very timeconsuming approach, the readiness to adapt this method is currently relatively small. Theunderlying assumptions of the Black-Scholes formula, such as known volatility, fixed interest rates,and zero dividends are very strict and typically cannot be assumed in reality.

AdvantagesThe traditional DCF model cannot value flexibility, contingency, or volatility because it fails toaccount for the set of ovtions involved in business decisions. Since it can value uncertainty, theROM can OVCTCO!lle this shortcoming. F(J; example, if a company decides to defer an investmentuntil it has more information on the market, the DCF approach would value this eventualopportunity zero, while the ROM correctly allocates some value to the future potential cash flow.Moreover, in standard finance, higher volatility means higher discount rates and lower net presentvalues. When real options are priced, the higher the volatility, the higher the value of the implicitoption due to the asymmetry of payoff schemes (Copeland et. ai, 2000: 428 and Mauboussin, 1999).

First, a company's NPV has to be determined, using the DCF approach. Step two is to build anevent tree, based on the set of combined uncertainties that drive the volatility of the company'svalue. An event tree models the uncertainty that drives the value without any decision built into itand help clarify how the present value develops over time. The third step is to put the decisions thatmanagernent may make into the nodes of the event tree to tum it into a decision tree. The event treemodels the values that the company reaches through time, while the decision tree shows the paycffsfrom optima 1 decisions due to the respective scenario. These payoffs are those that would resultfrom the option that is being valued. The final step is tile valuation of the payoffs in the decisiontree using the method of replicating portfolios applying the Black-Scholes formula.

event trees

I Computing of base! case resent valueI without flexibilitvI using DCF mode!

I Identi fication andI incorporation ofI • II managenaflexibilities creatinga decision tree~-- __ ~ __ ~~~_L __ ~ ~~~ J_ __

Source: Copeland and Antikarov (2000: 219-240)

Conduction of Real II Options Analysis I

JI Modelling theI uncertainty using

Table 3. Four-step process to apply the real options model

In order to assess a more "correct" value of a company, an option premium for uncertainty andflexibility must be included in the valuation. The total value of a company should therefore be thenet present value determined by DCF analysis and an option premium calculated through the ROM.A thorough derivation and description of the practical implementation of the ROM can be found inCopeland and 'Antikarov (2000: 219-240), suggesting the following four-step process to value

. companies with the help of the ROM:

A Practical Model

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What is true value of IT companies and how do capital markets professionals like especiallyinvestment bankers cope with the valuation problem occasioned by an uncertain future? It turns outthat there are several alternative models that all yield quite different results. When valuing acompany, the DCF model or the CC model are mostly applied by investment banks. While theyhave analytical (DCF is conforming with the CAPM) and practical (widespread, multiples aresimple) merits, substantial problems remain like especially ignoring future optionalities so theymost probably miss the true economic value. The methodological shortcomings, such as their staticcharacter or bias caused by market moods can partially be overcome by using the real options

Conclusion

ROM in Information Systems (IS) researchThere is a growing [S research community discussing ROM based methodologies for addressingthe problem 0" IS valuation. As the quote from the ICIS 200 I debate summarized, especiallyvaluing IS flexibility and the associated problem of optimal IT investment time and scope arefocused on. As Taudes et aI, (1999) note: "Infrastructure is a necessary investment that businessunits of functional areas are unlikely to make". Here, ROl,;! is discussed as a means of overcomingdeficiencies of controlling theory when applied to network problems. Especially in the context ofISsourcing decisions, the valuation of IS is key. How CClD fair prices for the future production of ISservices be determined when the value contribution by the IS cannot be measured in a sophisticatedway and when the future is indeterminate? IS valuation approaches from controlling theories arepresented in (Kelechi, 2000; Kwarne, 2000) and include TCO models (total cost of ownership) asproposed by Gartner Group in 1986 (Berg et al., 1998), scoring models or qualitative models suchas Balanced Score ClfOS (Hommel, 2000). Most of these models focus on the cost side of IS andcannot cope with many important value aspects like positive network effects and futureuncertainties and opportunities. Responding to the challenge of valuing IS tlexibility, Taudes et aI,(2000) argue that a particular uncertainty endemic to (typically long-term) infrastructure decisionsis the scope of future (usually sho: ter-term) applications utilizing that infrastructure. Applicationsoftware is significantly more subject tc changes in functionality (and thereby utility) over timethan is the underlying infrastructure which is typically very hard to change, politically as well asfin'lnri811: This has the infrastructure's flexibility regarding future applicability appear animportant aspect that has not been dealt with so far. Corresponding to the researcher's findingsabove, he finds that budgeting models like the i<PV model only determine lower utility bounds forunchanged software applications and that future changes might be considered using option pricemodels.

In most cases, a company is valued using the DCF and the CC model The DCF result is often usedto check the value based on the CC mode!for plausibility, However, there are tendencies to applythe ROM in the field of Equity Research when valuing new emerging technologies, for example inthe semiconductor industry. Besides, ROM is quite popular within the oil industry.

parameters, this approach lacks acceptance. As it is not taught at most universities, analystsentering investment banking are typically not equipped with the necessary knowledge. Someinvestment bankers admit that it is just too troublesome to acquire a working knowledge of thismatter as long as established methods are broadly accepted. Furthermore, clients do not accept thisapproach as they lack understanding for it. One associate states that it is easy to argue with a clientwhether or not a company should be priced at 4 or 6 times an EBIT multiple but that it is ratherhard to convince someone that the time to expiration of the underlying option should be extended inorder to arrive at a higher company value.


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model. Real options capture the value of managerial flexibility to adapt decisions in response tounexpected market developments. The real option model enables corporate decision-makers toleverage uncertainty and limit downside risk. Companies create shareholder value by identifying,managing and exercising real options associated with their investment portfolio. The real optionsmodel applies financial options theory to quantify the value of management flexibility in a world ofuncertainty.Generally, ROM are perhaps the most promising area for valuation of intangible assets, InformationSystems Infrastructure and other non primary commercial assets. According to Umobong(2000: 105), real option models attempt to extend the intellectual rigor of option pricing models tovaluation of nonfinancial assets and liabilities. Instead of viewing an asset or project as a single setof expected cash flows, the asset is viewed as a series of compound options that, if exercised,generate another option and a cash f1ow.As the practice i knowledge of the ROM is not yet widespread and as the underlying estimation ofparameters is difficult, this approach is not often neither in 11'0 price determination nor inIS valuation. But interestingly, when NPV was introduced in the mid 1960's, it was rejected forhavi i: . . d f 1 . , I (1'" , ?O()? 1_"0'lavmg unreahst:c assumptions an: or oemg oven:' comp ex anon et at, _ I z : ')0).For the Informanon System domain, ROM provides a rich ground for developing tools Tordisciplined decision making (Chuka, 2000: I54). Recently, the value of applying ROM instead oftraditional valuation approaches has been shown by Kwame (2000) who used a case study todemonstrate how conventionalional model would have generated wrong IT investmentrecommendations in an electronic banking network. One has to be cautious when applying anyvaluation model and when their mathematics become too interesting. The mathematics of financialmodels can be applied precisely, but the models are not at all precise in their application to thecomplex rea! world. Their accuracy as a useful approximation to that world varies significantlyacross time and place. The models should be applied in practice only tentatively, with carefulassessment of their limitations in each application.


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Kekere, R. (1999) Bubble, Human Judgment, and Expert Opinion, Scholary Paper, BenitoFoundation Discussion Paper No. 1303,Niger Delta University, Bayelsa, Nigeria.

Hommel, U. (2000) Bob Jensen's Threads on Real Options, Option Pricing Theory, and ArbitragePricing Theory, New York, Prentice Hall.

Grinblatt, M. and Titman, S. (1998) Financial Markets and Corporate Strategy, Boston,Irwin/McGraw- Hill.

Dermine, J., Wildberger, K. (2001) IS valuation methods - Insights from Capital Markets7th Pacific Asia Conference on Information Systems, Adelaide, South Australia

Damodaran, A. (2001) The Dark Site of Valuation, New Yark, Prentice HallDeprie, T. (2001) Investment Opportunities as Real Options, Calabar, Obong Press

Copeland, T., Koller, T. and Murrin, 1. (2000) Valuation, Measuring and Managing tile Value ofCompanies, New York, John Wiley & Sons Inc.

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online:Berg, T., Kirwin, W. & Redman, B. (1998) TCO: A Critical Tool for Managing IT',London, Gartner Group Inc.

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