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Managing and Using Information System by Carol S. Saunders, Keri E. Pearlson

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THE BUSINESS OF IT

This chapter explores the business of IT and the customers it serves. Beginning with the introduction of a maturity model to understand the balancing act between IS supply and business demand, key IT organization activities are described and related to one of the three maturity levels. The chapter continues with a discussion about what the IT organization does and does not do and how the leadership within the IT organization ensures that the IT organization's activities are conducted efficiently and effectively, both domestically and globally. We then look at business processes within the IT department such as building a business case, IT portfolio management, and valuing and monitoring IT investments. The remainder of the chapter focuses on funding models and total cost of ownership.

The CIO of Avon Products, Inc., in New York relies heavily on hard-dollar metrics such as net present value (NPV) and internal rate of return (IRR) to demonstrate the business value resulting from information technology (IT) investments. Although these are not the typical IT metrics, they are the language of business. Funding IT becomes a matter of speaking the language of business. “We apply all of the analytical rigor and financial ROI tools against each of our IT projects as well as other business projects,” the CIO (Chief information officer) of Avon Products remarked. Avon ...

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