Information Technology in Contemporary Business - Annotated Bibliography Example

Last few years IT (Information Technology) rapidly has developed and explored the needs of business fields, as a result, today almost every organization are making the IT department as a major part for their business. Within the IT sector, Servers and Networking paraphernalia are the huge part for the costing in an organization. Obviously, it's a base part for the cost analysis with sourced equipments, which need to be used for the foundation of an IT department. The principal idea of an IT department is linking up with all other departments, the target to gain the proper supervision with correlated workers, proper communication, and quality production process within the schedule time range. Simultaneously the man power and developing the required software should be counted for the major costing. After all, there are a lot of issues which come under consideration like, total departments including IT, manpower, Required equipments (Computer, Server, Network tools, etc.) data backup system for safety as well all other required issues. Most of the organization are turning department from a cost in to a revenue earner. Coulson-Thomas believes: 'IT departments need to rise above equipping people to use standard corporate technologies and help key workgroups such as bid teams working on critical tasks to be more effective. Rather than spend money on infrastructure IT directors need to become more involved in revenue earning activities.' But the major problem comes out to summarizing the cost within all the departments in an organization. It comes to the count of what should be the different cost for individual department within an organization. For any individual IT department, it requires the setup cost, with other departments as because all the departments need to make proper links with the IT department. If an organization is organized with five or six departments, than, there must have an IT department that will serve for the IT department. So, all the departments has its individual cost that need to count for final costing. According to Franklin Lowenthal and Massoud Malek: "In a manufacturing company, certain departments can be characterized as production departments and others as service departments. Examples of service departments are purchasing, computing services, repair and maintenance, security, food services, and so forth. The costs of such service departments must be allocated to the production departments, which in turn will allocate them to the product. It is known that one can view the cost allocation problem as a fascinating Markov process, with the production departments as the absorbing states and the service departments as the transient states. Using Markov analysis, we will show that this yields additional insight into the underlying concept of reciprocal service department cost allocation by proving that the "full service" department costs can be used to determine the price that should be paid to an external supplier of the same service currently supplied by the service department." Source: Journal of Applied Mathematics and Decision Sciences Volume 2005 (2005), Issue 3, Pages 137-147 doi:10.1155/JAMDS.2005.137 So far, it has a similarity with quote that should be in mind that if the whole cost are not owed within all the departments, as per its self usages of the department by prefix schedule of target budget, they must take all the advantages of the benefits of IT resources. These sounds can be found here if we consider another example for an IT department, we can say, "Any organization can develop an IT department, getting profit developing IT department is the hard part." Nevertheless, operating a profitable IT department can be achieved with appropriate management routines in place. Determining your Cost of Goods Sold (COGS), tracking purchases and sales, and attending to the spending habits of your customers are the fundamentals of every successful IT departments. Source: From #140, January - February 2009, Making Money in Meat, Editorial: Dave Gutknecht, 2600 E. Franklin Avenue, Minneapolis, MN 55406, Mail: dave@cooperativegrocer.coop In this case, we see the waste of resources only without having proper benefits and utilization, all the departments and the concerned people should take the maximum advantages. Ultimately usage will come to an unexpected end, out of consumptions in a passing year. According to the view of accounting, costs come to the economic value of expenditures both for equipment, services, labor, goods, and paraphernalia as well the other things that brought for employ throughout a trade or other office individual. It means the amount denoted on invoices for the price recorded in bookkeeping for the further reference as an expense or asset for the cost basis. If we consider a person is involved to develop an application or any software, we have to take consideration about the actual cost and its consequences. If the benefits come out less rather than the expectation of out put, it will ultimately create affect to the resulting of effects for other departments. So, the prime part of the cost evaluation system should hit on the cost of IT functionalism and other related cost. It should entitle the win-win position; the turnaround expense should not cross the estimated budget. Cost analysis certainly figure outs and allocates the actual coats on the focused areas. According to Marta Garcia Abadia, "An effective true-cost analysis accurately allocates direct as well as indirect costs across focus areas such as programs, geographic sites or particular products, allowing nonprofit leaders to make more informed decisions about strategy and funding." Nonprofit Cost Analysis: Introduction Published Date: 2009-06-03 By: Marta Garcia Abadia http://www.bridgespan.org/nonprofit-cost-analysis-toolkit-introduction.aspx Most organizations have their direct cost analysis by their programs. To understand the true cost using programs within an organization there can be found some steps given below: Determine purpose and scope Gather financial data Allocate direct costs Allocate indirect costs Check your data Apply this knowledge An exciting article is found here about cost: The cost and the perceived quality of user support services are another matter. Emily Paulsen's article in Support Management in 1997 asked the question: "What Does [IT] Support Really Cost"2 The answer is, in large measure: We do not know. A similar question can be posed about the quality of IT support, and the answer is similar. User perceptions of the quality of IT services have not been measured in most enterprises, including higher education. Sufficient data can be cited to support the following proposition: "Information technology (IT) adds value to the work of most enterprises." Equally abundant data, which Paul Strassmann offers in his book The Squandered Computer,1 support the opposite conclusion: "IT destroys value in most of the enterprises where it has been deployed." Poorly designed applications, uninformative World Wide Web (WWW) pages with their inevitable broken links, opaque decision-support systems, and poor-quality hardware not only can frustrate users but can destroy value and increase costs by consuming large, unproductive blocks of users' time. One of the crucial defenses against such destruction of value by IT is a strong organization for the education and support of those who use computers and who gather information from various network resources. By Christopher S. Peebles and Laurie Antolovic(Christopher S. Peebles is Associate Vice President for Research and Academic Computing, Dean for Information Technology, Acting Associate Vice President for Telecommunications, and Professor of Anthropology at Indiana University.) http://www.nature.com/jhh/journal/v19/n7/abs/1001857a.html Once the US law makers were debating plans to reform the US education system, there was nobody to discuss how much the changes would come to cost and from where the money should come. As per discussion of Fred Jarrett, D-Mercer Island, a leader of the Basic Education Finance Task Force that designed the reforms, says the state will need $3 billion to $4 billion more a year to pay for the new definition of basic education. Estimates during the session seldom went above $2 billion a year. Basically the reform plan created the same classes both for US education system as well for the business system of the whole world. Basically only the IT auditors were involved in pre-implementation audits. Allocating the scope of time allocation they used to the idea of pre-implementation audits which was independent. They predefined some points as given below: 1) Does the new system meet the functional requirements of the business 2) 2) Are the project tasks defined in sufficient detail which identifies all of the components of the project 3) 3) Will adequate testing be performed to ensure that the system functions as intended 4) 4) Will the data conversion strategy ensure that all data is migrated to the new system with integrity Finding out this answer only the IT staff concluded the right answers. Let's see what I need to follow if I'm or any one is going to open an IT business: First if anyone is planning to open an IT business like data entry work with a small setup of office, he needs to make analysis what he needs actually and what should be cost for that. Very beginning he needs a small office, with all official equipments. It has a monthly cost to maintain the office. Then, comes the employees, their monthly salary, required computers, Internet and all the required tools, monthly office maintenance costs like, electricity bills, water, telephone, internet etc. After all there need an accurate analysis of the total costs for the whole thing. Now, he needs to calculate the turnaround revenues after a month of around the year, either getting benefits or expensed more than the overall cost. It should certainly clear the idea of making costs for a business. Of course, if you consider some major and international logics whenever you are making huge costs for any big organization or business as can be elaborate below: Social Cost: Social cost means as per neoclassical age, the total sum of private and external cost. They described it as individual decision making to any calculation cost and its benefits. As per rational choice theory entitles those individuals who only consider his self private costs when they are getting decided. On the other hand institutional ecological economists Karl William Kapp provided a definition of social cost." that share of the total costs of production that is not born by producers but is shifted to 3rd parties, future generations or society at large. Kapp, hence, rejected Pigou's confusing terminology of externalities and provides several hundred pages of empirical data to support his argument that social costs are systemic, i.e. rooted in profit maximizing behavior of businesses, and an enormous problem of modern civilization. In the real world, they are usually not or cannot be internalized and must not be considered as accidental minor aberration from the "optimal norm" that can be fixed with ad hoc measures." External Cost: The External Cost is also known as externalities, which can be compared as the costs that people are obligatory to pay rather than the buyer as a result of transaction. These types of costs are neither for individuals or society at all. When any one is planning for business for his new company, he typically should make the cost estimates to have his benefits or revenues will cover the cost. Basically this it the base plan both for private organization and government. Cost Benefit Analysis is another major part although it is used typically for government to appraise the allure to find out either the benefits outweigh the costs. The target is to measure the competence of the intercession comparative to the grade quo. This system evaluates the financial value of expenditures and hopeful returns. It means the cost and benefits of a product or any business. For example as per R.H. Frank, "a product manager may compare manufacturing and marketing expenses to projected sales for a proposed product, and only decide to produce it if he expects the revenues to eventually recoup the costs. Cost-benefit analysis attempts to put all relevant costs and benefits on a common temporal footing. A discount rate is chosen, which is then used to compute all relevant future costs and benefits in present-value terms. Most commonly, the discount rate used for present-value calculations is an interest rate taken from financial markets." Same time cost-benefit analysis, financial value may be used to less physical possessions like a lot of risks. The calculation usually used for time value of money formula. So far, in conclusion, it can be evaluated that the scientist has taken the world much easier way introducing the technology, as for example, IT became to the hand of people to get more benefited with the appropriates cost analysis for the business today! IT and its utilization combined the cost minimization, customized the expenditure, organized in IT Corporation, the possible best production with quality within the time range. Without any actual cost-analysis there is no possibility to have any better revenue in any business, where there is no IT development. After all, the technology, especially IT movement and its costs created the global improvement and revaluation on the world business for the time being. An actual cost analysis can eliminate the efficiency and wastes as well profit and loss for an IT organization or so on! Among other awards, the Knowledge Base was recognized by PC World Magazine as among those resources offering the "best free stuff online," was named "Distinguished" in the International Online Competition hosted by the Society for Technical Communication, was judged one of the top technical support sites by Windows Magazine, and was designated a "Cool Site" in the Netscape Open Directory Project Web site. _______________________________________________________________________________ Read More