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9276 Corporate Strategy And IT Governance

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9276 Corporate Strategy And IT Governance

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9276 Corporate Strategy And IT Governance

0 Download3 Pages / 633 Words

Course Code: 9276
University: University Of Canberra is not sponsored or endorsed by this college or university

Country: Australia


IS management and financial issues
IT spend has generally been flat for past 10 years and within this context, and while there are no hard and fast rules, it is estimated that most corporations spend between 2 and 5% of revenue on IT related activities. Typically this might be seen as 2 to 3 % being a healthy zone for manufacturing companies and 3 to 6% being the ideal zone for companies using IT competitively.
Organisations are spending on IT because of the benefits it brings, but sometimes this connection to benefits is lost when looking at the broader context for IS and IT management within organisations. What we can generally see, though, is that IT payoffs stem from the benefits of using technology and these benefits provide the motivation for IT investments. These benefits were initially connected with reducing total labour costs and often associated with transaction processing systems where marginal gains on high volumes of transactions lead to significant overall outcomes. More recently, these benefits have frequently been much more qualitative in nature.
The benefits can also flow from increasing the effectiveness of money spent on labour or reducing computing costs by employing lower cost technology. The significant thing with all of these areas is that managing benefits is usually more important than managing costs, but frequently management attention is focussed around cost reduction as this is much easier to quantify and to take substantive action with.
This means that senior IT managers must be able to present the current costs and benefits of IT activities, as this plays an important role in justifying the on-going existence of the IT function within organisations. Outsourcing has also increased the need for more accurate accounts of IT investments and expenses, as it may be necessary to compare the costs between internal and external provision of various IT services.
In these notes, we will consider different ways that IT can be measured, distinguishing between simple cost based approaches and more investment based approaches. This will then lead into ways in which organisations can account for their IT expenditure and whether this expenditure can be attributed to end user functions (business areas of the organisation). We will conclude by a brief consideration of IS budgeting and the productivity paradox.
Discussion Questions

Why is it important for business managers (managers of end user areas) to participate in IT investment decisions?

It is not uncommon for chargeback systems to result in some tensions between the IS department and business managers. What might be the cause of some of these tensions, and what should the CIO, or other IS managers do to help resolve these tensions?

Accounting for corporate networks can be difficult when chargeback systems are used – discuss some ways in which this might be done fairly. What might be the advantages or disadvantages of accounting for data networks as a corporate overhead?


It is important for business managers to take proper decisions as adoption of information technology can be estimated between 2 and 5% of total revenue on the activities related to IT.  As the organizations are spending on the process, the advantages are connected to it. On the other hand, IS as well as IT management are required to achieve properly within the organizations (Grant et al. 2014).  The advantages are connected to the flow from expanding the effectiveness on spending money and labor and minimizing the costs of computing through employing lower cost technology. It is important to focus on the area where people will be able to manage the on-going existence of IT function within the organization. It is required to focus on the process and gaining competitive benefits. On the contrary, investing on IT will be helpful to be familiar with the latest technology.  Hence, it is required to consider that differentiating between cost as well as cost based approaches will assist in developing investment based approaches. Matiin, Ratnawati  and Riyadi (2018) stated that measurement of IT can assist in managing IT and investment. The significance of managing IT will be helpful to understand the proper things and enhancing effectiveness as well as efficiency.
In order to understand the process of change back system resulting in the tensions of IS department as well as business managers. The reason of the tensions is important to develop the process that might have benefits as well as limitations. However, the significance of measurement need to start regarding superficial measurements (Formentini and Taticchi 2016). Managers will respond performing measures whether a department is trying to achieve. There will be different aspects of IT operations that can be measured with quantitative as well as qualitative. Comparison as well as benchmarking with the same of the organizations will assist to focus on the procedure of obtaining individual IT elements.
The staffs administrating local IT environment as well as informal support will be helpful to work in the group and participate through the business areas users in the IT projects. It is helpful to aware of the program that should consist of the costs of IT program. The revenue base is related to the procedure of teaching as researching in the information system. Tracking the system can be helpful to publish the statistics and comparison of the activities. On the contrary, it is important for the organization to distribute the process and appear as the IS budget line streams along with specifically not in IS organizations. The relationship between the processes is directly consisted of development costs that happens to be exercised (Klettner, Clarke and Boersma 2014).  There are several options for charge back system and there should not be effective process that can be helpful to manage the procedure. IT accounting system does not require to be completely precise. It may have effective administrative overheads as well as prove obtaining advantages. On the contrary, cost recovery methods need to appear in the setting and understand its usage effectively.
Formentini, M. and Taticchi, P., 2016. Corporate sustainability approaches and governance mechanisms in sustainable supply chain management. Journal of Cleaner Production, 112, pp.1920-1933.
Grant, R., Butler, B., Orr, S. and Murray, P.A., 2014. Contemporary strategic management: An Australasian perspective. John Wiley & Sons Australia, Ltd..
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability: Empirical insights into the development, leadership and implementation of responsible business strategy. Journal of Business Ethics, 122(1), pp.145-165.
Matiin, N., Ratnawati, T. and Riyadi, S., 2018. The Influence of Investment Decisions, Funding Decisions, Risk of Strategy, To Efficeincy, Finance Performance, Value of Firm, Good Corporate Governance As Moderating Variable In The Mining Company Coal Sub Sector Go Public In Indonesia Stock Exchange. Archives of Business Research, 6(6).

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