October 21, 2018  
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IT Manager Toolbox

This research section provides Computer Economics guidelines, templates, "how to's," checklists, and other practical tools for the IT manager.

Accounting for Software: Understanding CAPEX and OPEX
For IT managers, understanding the rules around accounting for software costs can be a confusing subject. This report provides a primer on the difference between capital expenditures (CAPEX) and operational expenditures (OPEX) and how they relate to accounting for software costs. We also outline how these principles vary according to the application development method that is used, whether a traditional waterfall approach or a newer process, such as agile development. Finally, we highlight the factors that drive business leaders to favor CAPEX or OPEX in accounting for software. (11 pp., 1 fig.)
[Research Byte]

Avoiding Technical Bankruptcy in Legacy Systems
Technical debt is a term that describes the consequences of a system that has become out of date because of accrued unapplied updates. But if an organization continues to take on technical debt, the system becomes a true legacy system, falling into a state we describe as “technical bankruptcy.” In this report, we identify the symptoms of technical bankruptcy and the devastating effects that it has on the organization. We continue by quantifying the scope of the problem specifically for ERP systems, using our research on the typical age, frequency of upgrades, and extent of modification of these systems. We conclude with recommendations on how to avoid technical bankruptcy and, for organizations that have reached this stage, strategies for getting out and staying out of technical bankruptcy going forward.  (20 pp., 6 figs.)
[Research Byte]

Four Essential Steps Toward Outsourcing IT Functions
The maturation of IT outsourcing and the improving economy continue to provide opportunities for organizations of all sizes to leverage outside service providers. The amount of work being outsourced continues to grow, but up-front planning is needed to ensure that the outsourcing experience is positive. In this report, we outline the essential steps needed to establish requirements, select a service provider, and negotiate a deal. (12 pp., 2 fig.)
[Research Byte]

How to Build an IT Service Catalog
A well-designed IT service catalog demonstrates the value of IT, defines service levels, facilitates budgeting, and aids in the evaluation of outsourcing services. Once an organization has decided to create a service catalog, however, the project can fall short of delivering on these promised benefits. This report lays out six steps for creating a well-designed service catalog, provides examples of the elements of a catalog, and concludes with advice on how to avoid typical pitfalls. (13 pp, 4 figs)
[Research Byte]

The Whats and Whys of the IT Service Catalog
The IT service catalog is a foundational element of IT service management. Organizations looking to implement best practices in their delivery of IT services need to ensure that all stakeholders have a basic understanding of this important concept. This report explains the concepts of the IT service catalog and why it is an essential part of IT service management. It also provides practical recommendations for implementation of a service catalog.  (13 pp., 2 fig.)
[Research Byte]

A Practical Framework for Business Continuity Planning
Too often, disaster recovery is simply an information-technology-led exercise. There is a growing recognition, however, that contingency planning needs to go beyond recovery of IT systems to become a business-led  process that prepares the organization for many forms of disruption and ensures that the business itself—not just the IT systems—will continue uninterrupted. This report provides practical guidance on best practices for business continuity planning. (11 pp., 2 fig.)
[Research Byte]

Elevating the Role of the CIO
CIOs are being asked to expand their role to support business change and innovation while they are struggling with maintaining aging infrastructure and declining resources. This report provides guidance for CIOs on how to elevate their role within the organization to one that has a meaningful influence on meeting strategic business objectives. In brief, we outline a personal development strategy for CIOs to optimize the IT infrastructure and lower ongoing support costs so that they can free up resources and focus on integration, intelligence, and innovation. (10 pp., 2 fig.)
[Research Byte]

How to Evaluate a System Integrator
This special report provides an overview of the role typically played by system integration firms in enterprise system implementation. We then proceed to outline proposed criteria for evaluating system integration or software implementation consulting firms. The criteria are presented in the form of an interview questionnaire for easy use in interviewing or reference-checking candidate firms. The report concludes with recommendations for effectively managing the roles and relationship of system integration firms in enterprise system projects. (13 pp., 2 fig.)
[Research Byte]

Four Essential Steps Toward Outsourcing IT Functions
The maturation of outsourcing, globalization, an abundance of offshore providers, and the improving economy are creating more opportunities for organizations of all sizes, but especially for small and midsize businesses, to leverage outside service providers. This report outlines the essential steps required to establish the requirements, select a service provider, and negotiate a deal. (11 pp., 2 fig.)
[Research Byte]

How to Evaluate IT Procurement Contracts
This report serves as a primer on IT procurement contracts. Our focus is primarily on contracts for IT services, though the principles apply to any type of IT procurement. We explain the typical elements of an IT procurement contract and the major types of contracts, including various types of fixed-price and cost-reimbursable agreements. We then provide guidelines for choosing the right type of contract based on characteristics of the procurement or project. We conclude with a checklist that can be used to review proposed contracts. (7 pp., 2 fig.)
[Executive Summary]

How to Negotiate a Computer Lease for Maximum Flexibility
Lease agreements are often lengthy documents, printed in small type, and loaded with legal jargon, designed to give the impression that they cannot be easily understood or modified. Therefore, too many buyers simply sign the lease agreement as presented. This is a mistake. This article explains fourteen common leasing terms and conditions that lessees can and should negotiate up front to best serve the buyer's interest and grant maximum flexibility throughout the lease term. (6 pp., 2 fig.)
[Executive Summary]

Using Economic Value to Justify IT Investments
For a new IT investment to be approved, the CIO must be able to write a business case that speaks directly to executive management in the language of shareholder value. For many companies, this means understanding the basic concept of Economic Value Added (EVA)--a powerful tool for calculating the business value of an IT investment. This report is an "EVA primer," providing a simple example of the EVA calculation for a fictitious company and the improvement in EVA from a proposed IT investment. The report also provides insights into why improved asset turnover is often the best path to improving the economic value of an IT investment. (5 pp., 3 fig.)
[Executive Summary]

Criteria for Evaluating Alignment of IT with the Business
Although business and IT alignment has been discussed for years, companies are still struggling to effectively align their IT strategy. This report provides details on the critical and elusive topic of strategic alignment, including a form with criteria for ranking IT alignment with the business within a specific organization.

How to Plan for New IT Equipment Acquisitions
Whether you are purchasing or leasing IT equipment, there are many issues to consider in the acquisition process. This article examines the various decisions required in this process, briefly examines the pros and cons of purchase versus lease, and provides a high-level outline to ensure that the decisions made will deliver sound economics and flexibility for the organization.

Determining Fair Market Values and Residual Values for IT Equipment
Just as the residual value or fair market value at lease end is central to a lessor’s profitability, understanding the projected residual value of equipment is a critical factor for your organization when implementing equipment procurement policies and lease management practices. This special report provides precise definitions of terms, an overview of the perspectives of the lessee and lessor, and a guide to negotiating lease contracts consistent with your business objectives. (3 pp., 1 fig.)

Checklist for Evaluating E-Commerce Security
Numerous successful website violations demonstrate e-commerce’s vulnerability to security threats. A successful security program necessitates a continuing cycle of evaluating, improving, and rebuilding defenses. This article provides a checklist to assist in developing a cost-effective policy that takes into account all factors required for success. (3 pp.)

Checklist for Reporting a Computer Crime
This article provides a checklist of practical steps to follow in the event that your systems are hacked or accessed by an unauthorized party. Actions include how to contact law enforcement, information to gather to assist in the investigation, and information to gather to determine damages. (2 pp.)

Top Ten Steps for Disposing of Obsolete Computer Equipment
As the glut of high-tech junk accumulates, businesses are facing increasing pressure to properly dispose of obsolete computer hardware. In addition to compromising the environment, improper disposal of obsolete computer hardware can result in leakage of proprietary company information and violation of new federal privacy laws that ban the disclosure of non-public financial and medical information about employees and customers.  This article provides a checklist of questions to simplify the process of electronics disposal and comply with new federal privacy regulations. (3 pp.)

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