| This dissertation focuses on understanding what constitutes optimal system upgrade planning and risk management when a key component technology is evolving rapidly. It addresses several problems in technology upgrade management: avoiding obsolescence, reducing life cycle costs, improving performance, mitigating market risks, and creating incentives to optimally balance these concerns. The US Department of Defense (DoD) faces an important technology upgrade management challenge. How to maintain the technological superiority of its systems in the face of rapidly advancing commercial technology that is widely available to potential adversaries. Flat panel display technology is the example used throughout the dissertation to illustrate these challenges.; A mathematical model for long-term upgrade planning is used to determine optimal upgrade timing, whether to upgrade or replace a subsystem, and the net value of alternative technological approaches. The choice between commercial versus military custom flat panel displays is treated numerically. The model is expanded to quantify certain risks and benefits associated with system design choices: (1) What is the value of flexibility with respect to future technology changes? (2) What are the potential benefits of using common designs across systems?; The final chapters relate design strategy ideas---especially the concept of modularity---to the problem of upgrade management in DoD. An upgrade management approach based on explicit value modeling can align the incentives of the key players: users, system managers, contractors, subsystem integrators, and component suppliers. A software tool is proposed for implementing the upgrade planning and design risk models. |
