Chapter 4 Flashcards
What is IT budgeting?
The process of allocating monetary resources to various IT programs for a new year.
Capital expenditures?
Physical assets that will be used for more than one year.
Operating expensens?
Costs for a compnay to run its business operations on a daily basis.
What is a chargeback system?
The management practice of billing business departments for services by information technology department.
What are the (8) objectives of a chargeback system?
- Cost recovery,
- Resource allocation,
- Responsebility,
- Efficient use of IT resources,
- IT performance evaluation,
- IT planning,
- Increase user awareness,
- Increase staff awareness.
Which two types of non-chargeback systems are there?
- Unallocated cost,
- Simpe cost allocation.
What is the non-chargeback type of unallocated cost?
Costs are not allocated to BU but deducted in full from organization. (Used when little experience with IT)
What is the non-chargeback type of simple cost allocation?
Not based on BU usage, but based on revenue earning, employee number, total cast. (Is easily calculated but can be unfair)
Which two categorizations of chargeback systems are there?
- Recovering cost
- Profit making
What is the chargeback system categorization of recovering cost?
What is the chargeback system categorization of profit making?
Which three types of cost recovery types are there?
- Cost recovery-average pricing,
- Cost recovery-standard pricing,
- Cost recovery-flexible pricing.
Which two types of profit-center types are there?
- Profit center-fixed pricing,
- Profit center-market pricing.
How can effectiveness of chargeback system increase?
- Involvement in budget preparation,
- Accountability for meeting the IT budget,
- Cost variability of the charges.
