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ERIC Number: EJ850635
Record Type: Journal
Publication Date: 2009
Pages: 14
Abstractor: ERIC
Reference Count: 0
ISSN: ISSN-1528-5324
A Costing Model for Project-Based Information and Communication Technology Systems
Stewart, Brian; Hrenewich, Dave
EDUCAUSE Quarterly, v32 n2 2009
A major difficulty facing IT departments is ensuring that the projects and activities to which information and communications technologies (ICT) resources are committed represent an effective, economic, and efficient use of those resources. This complex problem has no single answer. To determine effective use requires, at the least, a comprehensive review of the institution's organizational, strategic, and competitive position, coupled with a clear understanding of the core competencies of the internal ICT resources and a broad knowledge of external resource capabilities. An essential first step for effective planning, budgeting, and funding of ICT resources is providing good cost information. Failure to have a strong grasp of ICT economics will, at best, result in a misallocation of resources supporting the activities of the institution. At worst, it may result in failing to serve stakeholders appropriately. A reasoned decision on assigning resources between alternatives requires a good estimate of their costs. In addition, a business-case return on investment (ROI) analysis requires valid and repeatable projections. Without these, the decision space is indeterminate and involves non-economic arguments. In this article, the authors seek to unravel a key aspect of this complex puzzle: how to determine the cost of ICT resource use in order to provide the information necessary to make an effective decision. Knowing how much it will cost to undertake an initiative, either in dollars or in foregone opportunity, makes it possible to ascertain the supply cost of any initiative, compare choices, and use traditional financial metrics in making a go/no-go decision. The authors created a model that calculates the economic cost of an ICT system. It does this by identifying the building blocks or components of a system and determining the cost of such components. Specifically, the authors address the following questions: (1) What are the main cost drivers of ICT activities?; (2) What does an ICT system cost?; (3) What does an ICT project cost?; and (4) How can an institution estimate the costs of any given ICT configuration? Benefits and lessons learned from using this model are also discussed. (Contains 7 endnotes.)
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Publication Type: Journal Articles; Reports - Descriptive
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A