FINANCIAL CONTROL OVER

IT- BUDGETING AND COST

CONTROL
  Budgeting and cost control

Budgeting and cost control

comprises the estimation of costs,
the setting of an agreed budget,
and management of actual and
forecast costs against that budget.
 WHAT is BUDGETING?

The process of creating a plan to

spend your money. This spend
plan is called a BUDGET.
Budgeting is simply balancing
your expenses with your
income.
  IT budget components

Compensation costs for IT professionals

fall within the IT budget, including costs
for external consultants used by the IT
department. Expenses related to building
and maintaining enterprise-wide and so-
called back-office systems are also
included in an IT budget.
 WHAT is COST CONTROL?

The practice of identifying and reducing business

expenses to increase profits, and it starts with the
budgeting process.
 Cost Control includes:
 monitoring cost performance
 ensuring that only appropriate project changes are included
in a revised cost baseline
 informing project stakeholders of authorized changes to the
project that will affect costs
OPERATIONAL ISSUES
 Developing Operational Priorities

Any useful policy and mechanism must

balance the benefits of the protection
against the cost of designing,
implementing, and using the mechanism.
This balance can be determined by
analyzing the risks of a security breach and
the likelihood of it occurring.
 Cost-Benefit Analysis
Like any factor in a complex system, the benefits of
computer security are weighed against their total
cost (including the additional costs incurred if the
system is compromised).
 Risk Analysis
To determine whether an asset should be
protected, and to what level, requires analysis of
the potential threats against that asset and the
likelihood that they will materialize.
 Management of Computer Operations

What is computer operations?

Scope of work
 Computer centre
 Hardware installation and support

 Running routine and ad hoc computer jobs

 Reporting problems to system owners

 Disposal of equipment and storage media

Job nature
 Separate from application development and
maintenance
 Work in shifts

 Work according to schedule

 Isolated work environment

 Follow procedures or work instructions

 Computer operators must be well trained

Quality management Frameworks

 Popular frameworks
 ITIL (Information Technology Infrastructure Library)
 ISO 9000
 Cobit (Control Objectives for Information and Related Technology)
 CMM (Capability Maturity Model)

 No one is designed specifically to address issues of computer

operations
 Just high-level framework
 Can apply the principles but have to figure out the implementation
details
 Basically depend on past experience
 Should check out the details of ensuring quality service from
computer vendors and software developers
Financial Management
Capital Expenditure
 Computer center
 Equipment racks
 Servers, storage devices, network and communication devices, etc.
Operating Costs
 Rent
 Building management fee
 Electricity charge
 Telecommunication costs
 Maintenance costs
 Payroll
 Outsourcing charges
 Insurance premium
 Replacement of UPS batteries once every five years
Internal Charging

 Sensitive issue
 Utilization can be based on the use of racks, use of CPU
time, use of disk space, or a combination of these
factors
 Total cost = depreciation of assets + operating costs

 Cost of utilization unit

= total cost divided by total number of utilization units
 Charge = Unit cost x Number of units
MANAGEMENT OF SYSTEM
ACQUISITION,
DEVELOPMENT, AND
IMPLEMENTATION
 Development Acquisition
Alternatives

The term ‘acquisition’ refers to all the stages

from buying, introducing, applying, adopting,
adapting, localizing, and developing through to
diffusion. The acquisition issue is multifaceted
for various reasons including large variety of IT
applications, rapid change in new technology,
and involvement of several business entities in
the organization.
 Acquisition Process

STAGE 1: IDENTIFYING, PLANNING, AND

JUSTIFYING THE INFORMATION AND SYSTEM
REQUIREMENTS
STAGE 2: RESTRUCTURING INFORMATION
SYSTEM ARCHITECTURE
STAGE 3: IDENTIFYING A DEVELOPMENT
ALTERNATIVE
STAGE 4: CONDUCTING A FEASIBILITY ANALYSIS
STAGE 5: PERFORMING THE SELECTION
PROCEDURE
STAGE 6: PROPOSAL EVALUATION PROCESS
STAGE 7: IMPLEMENTING THE SELECTED
SOLUTION
STAGE 8: REVIEWING AND MONITORING
THE ACQUISITION PROCESS
 Key Factors in Selecting Available
Alternatives

1. Buying the Applications (Off-the-Shelf

Solution)
2. Leasing the Applications
3. Developing the applications in-house
4. Outsourcing the applications
Acquisition Process
THANK YOU
!!!! 
 EXAM!!!
 1. Budgeting is simply balancing your expenses with
your income.
 2. Cost control is the practice of creating plan to spend
your money.
 3. To solve for the total operating cost, just divide the
total cost by total number of utilization units.
 4. Acquisition refers to all the stages from buying,
introducing, applying, adopting, adapting, localizing,
and developing through to diffusion.
 5. The last stage in Acquisition process is
IMPLEMENTING THE SELECTED SOLUTION.
 6. Computer operations are separate from application
development and maintenance.
 7. To determine whether an asset should be protected,
and to what level, requires analysis of the potential
threats against that asset and the likelihood that they
will materialize.
 8. Cost control includes informing project stakeholders
of authorized changes to the project that will affect
costs.
9. Computer operations can apply the principles but have
to figure out the implementation details.
10. IT budgeting is the process of identifying and
reducing business expenses to increase profits.
11. Computer operations basically depend on past
experience

ENUMERATION:
12-15. Key Factors in Selecting Available Alternatives