In delivering information services, there are three alternative approaches to managing the costs of IT. Identify and briefly discuss the three alternatives

      

In delivering information services, there are three alternative approaches to managing the costs of IT. Identify and briefly discuss the three alternatives

  

Answers


gregory
IT as a corporate overhead
IS costs are treated as an administrative overhead.
Merits:
?
Simple and cheap to administer.
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Encourages innovation and experimentation.
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Minimal conflict between IT and user departments
Demerits:
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No incentive to control costs
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No responsible use of IT
IT charged out on a cost basis (Cost based charge-out)
Users are charged for the costs of IT in proportion to their usage.
Merits
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Conceptually simple.
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Cost control by responsibility
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Motivation to regulate costs.
Demerits
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Inefficiencies of the IS department may be passed on to users
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Complex to implement in practice.
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Difficulty in determining appropriate cost units.
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Overhead costs of IT department still need to be met.
Market based charge-out.
IT department acts as a profit centre.
Merits
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External standards and price available.
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Encourages an entrepreneurial attitude.
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Prices are negotiable.
Demerits
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No comparable services might exist
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May result in under utilisation of resources
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Management skills may be lacking in IT
gregorymasila answered the question on December 18, 2017 at 13:28


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