ICT SERVICE MANAGEMENT
Lecture 4 — Comprehensive Exam Summary
Chapter 15: Financial Management
IT project cost-benefit analysis · IT services cost calculation · IT services charge-out
Overview
Highly quantitative chapter — bring calculator. Three big topics:
• Project cost-benefit analysis (NPV, IRR)
• Service cost calculation (7-step procedure with matrices)
• Service charge-out
Service delivery: demand and supply
Slide: IT consumers ↔ IT department via service catalog + projects
Lecture 4 — ICT Service Management — Page 1
, Part 1 — IT Project Cost-Benefit Analysis
Three steps: determine costs → determine benefits → compare.
Slide: 3-step CBA framework
Determining costs
• HIGH at start (development) / LOWER during operations (maintenance)
• Methods: compare to other projects, current systems, cost studies, TCO bottom-up
Determining benefits
• ZERO during development; RISING then MAXIMUM during operations; DROPPING at end of life
• Types: operational (most quantifiable), tactical, strategic (hardest)
NPV — Net Present Value
NPV formula: NPV = Σ_{t=0..T} CF_t / (1+i)^t. PV(B) − PV(C). Discount factor = 1/(1+i)^t. NPV must be
POSITIVE to accept project.
Slide: NPV summation formula
Lecture 4 — ICT Service Management — Page 2
Lecture 4 — Comprehensive Exam Summary
Chapter 15: Financial Management
IT project cost-benefit analysis · IT services cost calculation · IT services charge-out
Overview
Highly quantitative chapter — bring calculator. Three big topics:
• Project cost-benefit analysis (NPV, IRR)
• Service cost calculation (7-step procedure with matrices)
• Service charge-out
Service delivery: demand and supply
Slide: IT consumers ↔ IT department via service catalog + projects
Lecture 4 — ICT Service Management — Page 1
, Part 1 — IT Project Cost-Benefit Analysis
Three steps: determine costs → determine benefits → compare.
Slide: 3-step CBA framework
Determining costs
• HIGH at start (development) / LOWER during operations (maintenance)
• Methods: compare to other projects, current systems, cost studies, TCO bottom-up
Determining benefits
• ZERO during development; RISING then MAXIMUM during operations; DROPPING at end of life
• Types: operational (most quantifiable), tactical, strategic (hardest)
NPV — Net Present Value
NPV formula: NPV = Σ_{t=0..T} CF_t / (1+i)^t. PV(B) − PV(C). Discount factor = 1/(1+i)^t. NPV must be
POSITIVE to accept project.
Slide: NPV summation formula
Lecture 4 — ICT Service Management — Page 2
