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Chapter extension 21 - Chapter extension 21 Financing and...

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Chapter extension 21 Financing and Accounting for IT projects Q1 What are the costs in a Typical IT budget? Everything costs something Things that appear in a typical IT budget Hardware Software license fees Operations Personnel costs to operate the system Maintenance Personnel Indirect labor costs such as management and staff functions like data administration Training Deployment and systems development Refers to costs of creating new systems Deployment costs – those required to set up systems having little custom development (the cost of installing an email system) Systems development – costs to create new information systems that require either custom software or substantial work in the other four components of an information system Procurement Backup, recovery, and disaster preparedness
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Expensive hardware and large systems development projects often fall into that category IT budget is developed by incremental change Manager looks at last year’s expenses and make budget by determining incremental changes from last year’s results New projects require cost estimation Q2 Who pays IT costs? Depends on size of org and its accounting systems and philosophy Small orgs accumulate IT costs They make no attempt to assign those costs to departments or users IT costs are overhead expense Larger orgs allocate IT costs to users Allocation is called chargeback expense
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