Description
Write a 700- to 1,050-word (2- to 3-page) paper in which you recommend various components that may be used to measure the value of an IS and IT department to a company. Include the following:
- Methods used to measure the economic value of an IT department to a company
- Models for assessing the IS value put in place by the IT department
- Whether or not traditional financial ratios and measurements must be applied to determine the value of IT
Provide research and references to support your recommendations.
Explanation & Answer
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Value of IT and IS departments
In most cases, companies are contended with the returns they get in investing in systems
of formation technology. Research that was carried in Japan indicated that only 5% of firms get
sufficient returns for investing in information systems. The dissatisfaction shown on the returns
obtained from investing in IT systems is also reflected on the price of these systems. The
information system association reported that the price of the IT systems was one of the major
things that customers were not satisfied with. Price is the main issue when it comes to marketing
these systems. it is not easy to establish the value of assets which are intangible like software and
this has made it difficult for companies to estimate a reasonable price for the IT systems.
However, different methods have been put in place to help establish the values of the systems
because failure to do this will make the market to shrink.
Two methods have therefore been put been place to measure the value that an IT has to a
company. They are non-financial and financial methods. The financial methods include the
intrinsic value of ...
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