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Developing a practical financial model to redefine Information Technology from a cost centre to a benefit enabling centre

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1 Author(s)
Kurada, N. ; IEEE & ISACA

In large enterprises with multiple products and services, IT is often vertically integrated as a corporate function and investment in Information Technology infrastructure and resources appear in the general ledger and balance sheet as costs and depreciation with steep values. Here, they are viewed in the light of a cost centre. Further, compounding this unenthusiastic view is the misalignment between IT objectives and core business goals. Therefore, the Information Systems Audit and Control Association (ISACA) in its valIT framework proposes the value proposition of IT, and brings to the forefront that investment in IT should be managed as a portfolio of investments that is aligned with the business objectives. This view can be further enhanced when investment in IT is treated as a “benefit enabler” that is aligned with the business requirements. However, for a business to derive the full benefit of IT, the two views have to be harmonized, mutually appreciated and fully understood. And as managers and stewards of IT resources, the onus here lies on the latter to quantify and categorize benefits of investment in IT in economic terms (financial modeling) by reframing the value proposition questions. In other words quantifying future benefits in preset value terms to evaluate IT infrastructure and redefine IT from a cost centre to benefit centre.

Published in:

Network Operations and Management Symposium Workshops (NOMS Wksps), 2010 IEEE/IFIP

Date of Conference:

19-23 April 2010