An Approach for Optimum Upgrades of Information Systems
Rajeev Kumar

Abstract
The rapid pace of advancement in technologies has created possibilities for firms to invest in superior technologies to achieve higher utility. In such a technological evolving environment, it would be optimum for a firm to execute its decisions about technology purchases and “upgrades” to minimize the total system ownership cost. Upgrading and maintaining the current technologies in a system can be a time-consuming process and may involve training employees. Information Systems (IS) upgrades are particularly of business significance because they contribute a major portion to the total cost of system ownership in the long run. This paper considers a firm that utilizes an Information System, consisting of software and hardware technologies, and both of these technologies are expected to have a series of breakthroughs in the future. The dynamic programming model of the paper provides a theoretical basis for the firm to decide on its optimal upgrade decisions. The model is analyzed by a simulation study, and the ideas to expand this work have been discussed in the conclusion.

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