Valuing Multi-Sided Systems

Title: Valuing Multi-Sided Systems
Author: Philip Boxer
Category: Published
Where published: SEI Special Report

The report examines the challenges surrounding Through-Life Capability Management where operational capability is not dependent on any one type of platform or equipment, but rather constitutes a composite capability generated through collaborating system of systems. It presents a multi-sided market framework for describing the relationship between composite capabilities generated in this way and the supporting role of its suppliers. This framework defines costs of alignment as the costs incurred by a user in bringing the collaborating systems together operationally to meet particular demands. These costs of alignment are demand-side costs, and the report describes the use of real option valuation methods to establish the value of changes in these demand-side costs of alignment arising as a consequence of introducing new supply-side flexibilities.

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