Documente Academic
Documente Profesional
Documente Cultură
Economic Aspects of
Information Systems
Updated 2014
Outline
Costs & Benefits from IS
Financial Assessments of Information Systems Economy
(size and timing of returns)
Combined Assessments of Information Systems
Economy
Software & Hardware Acquisition (develop, buy, rent)
Summary
Quantitative or
qualitative figures?
Quantitative
Qualitative &
Quantitative
Tangible Costs
- Direct investment in software & hardware (one time)
- IS installation & employee training (one time)
- Operating costs for an IS (recurring) expenditures on software
licences, labor costs of IS staff, IS maintenance, overhead for
facilities, expenses of communications carried out by computer
networks partaking in IS.
- Loss of money and time with new IS that does not perform as
expected (opportunity cost).
- Total Cost of Ownership sums up all the costs in a system life
cycle.
Intangible Costs
- Effort put in learning a new IS and associated process
- Employees loss of work motivation due to new processes/IS
- Employees resistance to new processes/IS
- Lower customer satisfaction due to improperly performing IS
- Limitations in decision making when a new IS cannot deliver
reports managers need to make decisions.
- Note that some intangible costs may result in tangible costs.*
Intangible Benefits
- Customer value that does not translate directly into monetary gains
for a company
- Better control and decision making, which do not translate readily
into monetary gains
- Improvement in the appearance of reports and other business
documentation (better quality but no more money).
- Increased knowledge capabilities (note: these are a condition for
making more attractive products, but before this products are made
and sold no monetary gains accrue).
Time (years)
Balanced Scorecard
Tangibles
Tangibles &
Intangibles
- Process focus!
Intangibles
For pros & cons (benefits & costs) see the chapter.
More
3. Rent:
Annual licencing of software or hardware
Rent via the Cloud* (IS services that can be rented).
Cloud Advantages:
Reduce costs: the payment method is per use and there are no costs
for development & maintenance (full IS services options)
Client benefits from new IT as vendor keeps updating it to stay
competitive gains in clients business processes.
Cloud Disadvantages:
Synchronizing business processes between client and vendor
Risk of compromising confidentiality of business data
Vendor lock-in (it is hard to get out of Cloud as a company relies
more on a cloud vendor)
Unexpected changes in pricing services.
Summary