Economies of Architectural Investments in Industrial Practice

1 Architectural investments are large, lengthy, and risky. A decision to invest in architecture is often postponed because of difficulties to estimate its economic value and to communicate its long-term benefits. This paper proposes a method to support a decision process of architectural investments on an economic basis in industrial practice. The method combines qualitative Real Options analysis to design an architectural investment decision process and the Net Present Value to quantify the economic value of investing in architecture. The proposed framework can be used by practitioners to make economically sound decisions instead of relaying on gut feeling. The paper demonstrates the framework by valuating an investment in phasing out legacy software in a medical imaging product line.