Business value of IT

Teiminal Papei


2/11/2011
ShanLl 8uslness School
!aydeep Modl












Subm|tted 1o
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Introduction

Since last some years the business value oI inIormation technology received remarkable
interest Irom the business community. But the question is whether the larger amount oI IT capital
invested on some time. And the business continues to invest larger amount in the inIormation
technology. Business must deal with the diIIerent types oI the inIormation and the inIormation
system makes it possible Ior the business to manage all inIormation, make better decisions and
improve in the business. Business has to organize the IT department because it provides them
inIormation oI the business to take a decision. Outsourcing service is very help Iull to the
business sector because it will be increase those sales & improving their perIormance. In
business using IT they are manage the risk on inconvenient event. In business they compare IT
department to their competitor to improve their area oI business. InIormation technology is a key
to achieve goals in the business world.


%0 Valu0 of I%
Business is working on the live & hard number so the company manager has to explain
the work oI the IT department & how IT department work on its goal. There are six Iinancial
models which demonstrate IT bottom-line.
O TCO(Total Cost Ownership)
O #OI(#eturn On Investment)
O conomic value added
O #eal option value
O #OA(#eturn On Assets)
O #eturn On inIrastructure employed

TCO:-
This Iinancial model shows the 'IT assets cost until it reaches to its useIul liIe.


#OI:-
This Iinancial model shows that the investment on the IT in the business and it
express the income on the investment on IT tools.
conomic Value Added:-
It is same like the #OI model but it is based on the opportunity cost instead oI the
internal rate oI return.
#eal Option Valuation:-
This Iinancial matrix model calculates the value oI IT Irom the IT project.
#OA:-
This show the net income oI the IT project divided by the income oI the assets.
And it is use Ior the earn the income
#eturn on inIrastructure employed:-
This is also work like the #OA but it shows the cost oI service instead oI the cost
oI assets.


0tting t0 rigt r0turn from I%

Business must obtain all the inIormation technology and need at the best possible price &
use oI time and the other resources. Nowadays business becomes more dependable on the IT Ior
IulIill their goals. IT plays its role to IulIill goal oI business. And their objective to getting
supportive IT Iunctions with competitive realities.
II the IT budget is less than 1 oI gross revenue then the business is starving IT and
cheating their business.
II it is between 1 and 2 business is in the survival mode.
II it is between 2 and 3 business is large Iirm oI IT



I% Outsourcing
The decision to outsourcing IT to identiIying the central task oI the organization`s value
propositions. This job provides to the expert service provider. And it is used to sale the product
to the in-house by call center & used to outsourcing in the other country. And the product is
provided to the customer to the lower price. II u wants to outsource any Iunction u have to create
the SLA (Service level agreement) to the vendor oI the product. And business has to set quality
standard, deadlines and cost.


I% %ools
IT tools in the business is used to IulIill the need oI the business. Some tool oI IT like
#! system is used to manage the Iirm`s data & manage the employee`s detail & many more.
There is other tools like tally and that is used to manage company`s accounting systems and all
IT tools are give them all data when they want. And the IT tools are very costly but they are very
time consuming so the IT tools are very useIul to the Iirm.


I% N00d From Busin0ss End
IT staII have a poor relationship with the people who are in business operation so IT
managers have to understand their business and they have to know the need oI them. They have
to work with the each & another department and work with the same team & same objectives.
Because working with the relationship solve the most oI diIIiculties between the IT & another
department.


Information %0cnology & Busin0ss Valu0 D0fin0d
As per the Intel, inIormation technology is a product, service or solution Ior them and
that are deploying to the store in the course oI the business unit to complete the goal. IT is a
group, department or the division oI the Iirm. And it is the responsible to developing &
deploying IT tools to the employees & user oI the Iirm. This it department works on the accounts
soItware, ManuIacturing, online retailer and so more.
In the business employees needs the internet connection and wireless technology, data
management, web application, hardware and soItware maintaining and #! so all Iirm needs to
IT department in their Iirm.
IT companies helps to another Iirms to maintain their data & the other IT related work so
the business value oI IT is higher.





















Conclusion
Business value oI the inIormation technology is higher because the IT department needed
in the all Iirm. As per this terminal paper it shows the need oI the outsourcing in the any business
Ior the selling the product in another country. IT tools are used to the accounting and the website
making and so more.

Bibliograpy

A ! oI Intel`s Business value oI inIormation technology.
A ! oI Business value oI IT by .S.Herris & avid Herron