In this
artide, I will talk about value metrics of information technologies
(IT).
In most
companies, IT managers must be describe clearly, "How their work
contributes to the company's business value" and "How IT
systems and processes suitability the firm's goals".
We have
six metric for mesure Business values of IT;
- Total Cost of Ownership (TCO) : This financial model
tracks costs from the time that the firm buys an "IT asset"
until that asset reaches the end of its useful life. Future costs are hard
to predict, but this is a good way to compare alternatives.
- Return on Investment (ROI) : This metric quantifies
how the firm realizes business value for its IT costs. ROI expresses the
value of hard costs better than it conveys the impact of intangible
saving.
- Economic Value Added : This metric works like
ROI, but it is based on the opportunity costs (the costs you
indirectly incurred by not investing the money differently) instead
of on the internal rate of return.
- Real Options Valuation : This metric calculates an
IT project’s value by weighing its ongoing and future fiscal impact.
It is particularly helpful in evaluating the choices involved in
start-up projects.
- Return on Infrastructure Employed : This works like ROA, but
it bases its ratio on the cost of IT services instead of the cost of IT
assets.
- Return on Assets” (ROA) : This is the net income an
IT project generates divided by the total cost of the assets it used to
earn that income.
Note: This
artide collection from The Business Value of IT (by Michael D.S. Harris, David
Herron and Stasia Iwanicki Auerbach © 2008)
