What's in IT for you (and your company)? Show off your ROI skills by sizing up your company's IT spending.EXECUTIVE SUMMARY * The difficulty of calculating the return on an IT investment often has weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. the case for funding such initiatives.
* Financial managers and other decision makers expect requests for IT funding to be framed in an ROI (Return On Investment) The monetary benefits derived from having spent money on developing or revising a system. In the IT world, there are more ways to compute ROI than Carter has liver pills (and for those of you who never heard of that expression, it means a lot). or shareholder value format so they can compare them with other investment options. * The successful measurement of IT projects involves evaluating critical resources and processes that produce desirable results and lead to overall organizational success. * It's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have essential to assign monetary values to nonfinancial Adj. 1. nonfinancial - not involving financial matters financial, fiscal - involving financial matters; "fiscal responsibility" IT results. Although some benefits of IT initiatives do not always produce short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. profits, they should reduce costs or increase revenue. * To calculate the return on an IT investment, measure its total costs, including those related to disruptions and risks, as well as its total benefits. ********** In too many organizations, decision makers overlook economic rationality in justifying information technology (IT) spending. Instead they acquire the best and most recent technologies to outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, other companies. The pressure to remain competitive is forcing many organizations to consider a more results-based approach, where the central question is: Will we see a return on investment (ROI)? Large IT, e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. and enterprise resource planning See ERP. (application, business) Enterprise Resource Planning - (ERP) Any software system designed to support and automate the business processes of medium and large businesses. (ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. ) system investments all face the same challenge: demonstrating their value in light of the historical difficulty of estimating the revenues they generate and their total costs. It typically fails on senior corporate and financial managers to evaluate the payoffs and recommend resource allocations resource allocation Managed care The constellation of activities and decisions which form the basis for prioritizing health care needs , and CPAs who know how to accurately calculate the return on technology investments can guide them through this process. With CEOs and CFOs demanding accountability for the tremendous investment in IT, managers are required to calculate the ROI and make a bottom-line bot·tom-line adj. 1. Concerned exclusively with costs and profits: bottom-line issues. 2. Ruthlessly realistic; pragmatic: a bottom-line political strategy. contribution. Few things are more convincing to top executives than measurable results. IT executives must find ways to measure and communicate the contribution of IT so that existing initiatives are managed appropriately, new projects are approved only when there is satisfactory return and marginal or ineffective projects are revised or eliminated. They need comprehensive systems to evaluate the impact of IT initiatives on financial performance. Typically, the payoffs of IT are not measured, ROI is not calculated and IT investments are not evaluated with the same rigor rigor /rig·or/ (rig´er) [L.] chill; rigidity. rigor mor´tis the stiffening of a dead body accompanying depletion of adenosine triphosphate in the muscle fibers. as other corporate investments. While senior IT managers are convinced they do create value and their initiatives would be significant profit centers if measured properly, they have difficulty proving it. Because CEOs and CFOs lack the information necessary to make well-informed well-informed Adjective knowing a lot about a great variety of subjects or about one particular subject Adj. 1. well-informed - possessing sound knowledge; "well-informed readers" intelligent decisions on the payoffs of these investments, most companies seem to focus on reducing the cost of IT rather than maximizing its potential to create value. This article describes a model that CPAs can use to evaluate IT performance and calculate the payoff. Accountants can use it to help CIOs evaluate and justify their initiatives and to assist CEOs and CFOs in making better resource-allocation decisions. THE STARTING POINT Noun 1. starting point - earliest limiting point terminus a quo commencement, get-go, offset, outset, showtime, starting time, beginning, start, kickoff, first - the time at which something is supposed to begin; "they got an early start"; "she knew from the Exhibit 1 on page 71 describes the inputs, processes, outputs and outcomes of IT initiatives. An organization's IT success is dependent on inputs. These include the existing corporate strategy, structure and systems. Along with available resources and the external environment, these are critical inputs that affect IT strategies. Other factors, such as leadership, IT structure and systems or processes, also significantly affect the performance and success of IT initiatives. The inputs and processes have an impact on IT outputs, which can be classified as either internal outputs--such as improvement in productivity, time savings, quality or overall cost reduction--or external outputs, such as customer acquisition, satisfaction and loyalty If the IT strategy and implementation are successful, these outputs should result in improved overall corporate profitability--the outcome. [ILLUSTRATION OMITTED] Every IT project or initiative must be measured and evaluated along the four dimensions of the IT Contribution Model. It is important to understand the relationships leading from the inputs to the processes and then flowing to the desired outputs and outcomes. For example, if an organization inputs more resources to consolidate and standardize stan·dard·ize v. 1. To cause to conform to a standard. 2. To evaluate by comparing with a standard. its IT infrastructure, its improved IT processes will lead to time savings, which in turn will increase customer satisfaction and loyalty, sales and revenues. USE THE RIGHT YARDSTICK Companies must develop appropriate metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. to closely monitor cause-and-effect relationships. Because some elements, such as leadership, are more difficult to measure, the temptation Temptation Terror (See HORROR.) apple as fruit of the tree of knowledge in Eden, has come to epitomize temptation. [O.T.: Genesis 3:1–7; Br. Lit. is to avoid measuring them at all. However, if they are considered crucial in demonstrating how IT can improve business success, they must be incorporated in the performance measurement system. It may be that nonfinancial performance measurement is more appropriate in such cases, but CPAs should try to use monetary values as often as possible when measuring drivers as well as outputs. For example, improvements in quality may be measured by the percentage of high-quality products, but it is more important to measure the dollars saved on reduced rework re·work tr.v. re·worked, re·work·ing, re·works 1. To work over again; revise. 2. To subject to a repeated or new process. n. . Similarly, increased employee productivity can be measured by the percentage increase in production output per employee, but it's better to measure the additional sales that result. Exhibit 2, page 72, lists a selection of measurement criteria. A more complete list of performance measures can be found in the Management Accounting Guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. , Evaluating Performance in Information Technology, published by the Society of Management Accountants of Canada The Society of Management Accountants of Canada, which is also known as CMA Canada, awards the Certified Management Accountant designation in Canada. CMA Canada represents 37,000 members and 10,000 students. (CMA-Canada) and the AICPA AICPA See American Institute of Certified Public Accountants (AICPA). (see "AICPA Resources"). There is no rule for the right number of metrics to include in measurement systems, but using too many tends to distract managers from pursuing focused IT initiatives. It is important to focus on the key indicators. Generally, a complete IT performance measurement system should include no more than 20 measures. CALCULATING THE RETURN The metrics for IT inputs, processes and outputs provide the tools IT managers and financial managers need to calculate the ROI. For the calculation to be complete, IT benefits and IT costs must be carefully identified and addressed. The IT Contribution Model plays a vital role by articulating the drivers of IT ROI, the relationships among them and all potential benefits. One study ("What CEOs Really Think about IT" by Erik Monnoyer in The McKinsey Quarterly, No. 3, 2004) reported that only half of companies actually monitored expected benefits. The challenge of Calculating the ROI of IT lies primarily in determining the benefits of IT projects and transforming them into monetary values. Because many IT projects overran o·ver·ran v. Past tense of overrun. their cost projections, it's important to be careful when estimating costs. Base estimates on the total lifetime costs of the project, including planning, forecasting potential risks, development and implementation, as well as maintenance and upgrades and disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. costs, both human and organizational. In general, the ROI calculation should be performed on a marginal basis, including only additional costs incurred by the new system. Likewise only new or additional benefits should be compared with the costs. A PRACTICAL EXAMPLE Company ABC ABC in full American Broadcasting Co. Major U.S. television network. It began when the expanding national radio network NBC split into the separate Red and Blue networks in 1928. decided to standardize and consolidate its computer software and hardware, including new notebook computers A laptop computer that weighs in a range from five to seven pounds. The term originated when laptops were routinely more than 10 pounds, and those that became lighter were placed in a special "notebook" category. In practice, notebook computer and laptop computer are synonymous. . It began a pilot study of 100 employees to estimate how much the notebooks would improve productivity and financial results. On the cost side, ABC considered the front-end front-end adj. 1. Of or relating to the initial phase of a project: a front-end investment. 2. Of or relating to the forward parts of a vehicle: a front-end alignment. direct costs, the operating costs operating costs npl → gastos mpl operacionales , the disruption costs related to human factors (hours lost due to IT training), the disruption costs related to organizational factors (lost orders and lower customer satisfaction) and the costs of risk mitigation MITIGATION. To make less rigorous or penal. 2. Crimes are frequently committed under circumstances which are not justifiable nor excusable, yet they show that the offender has been greatly tempted; as, for example, when a starving man steals bread to satisfy (the development and implementation of an IT performance framework). When it came to benefits, the employees in the pilot study reported average weekly time savings of two hours using the new notebook computers. Their productivity improved because they were likely to use their laptops more frequently and in more locations. As a consequence, ABC began offering more services, which in turn led to an increase in the number of new customers acquired. The notebooks also enabled faster and on-time placement of orders, which improved the manufacturing capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. (saving an estimated $50,000 in operating costs) and shortened short·en v. short·ened, short·en·ing, short·ens v.tr. 1. To make short or shorter. 2. delivery times. The overall quality of business processes improved, reducing grievance griev·ance n. 1. a. An actual or supposed circumstance regarded as just cause for complaint. b. A complaint or protestation based on such a circumstance. See Synonyms at injustice. 2. costs by $10,000. Customer loyalty also improved, leading to an increase in the profitability of the average existing customer. Finally, the study reported savings in direct IT costs based on the increase in information systems security, which reduced system downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. by 10 hours. (More details are provided in exhibit 3.) The ROI should be calculated before beginning an IT project to estimate its potential cost effectiveness and after the project to measure the results. Because the benefits of an IT investment increase over time, ROI should be calculated yearly throughout the life of the project. This facilitates budgeting, planning and resource allocation, and fits into a broad performance evaluation Performance evaluation The assessment of a manager's results, which involves, first, determining whether the money manager added value by outperforming the established benchmark (performance measurement) and, second, determining how the money manager achieved the calculated return and reward system. APPLES TO APPLES In the early days of computing computing - computer , investments were made almost exclusively on the basis of direct financial benefits that generally related to direct cost savings. But the opportunities for such direct savings have been reduced greatly. Despite the difficulty involved, using nonfinancial measures of performance--such as improved organizational agility and communications, enhanced employee performance, more flexible working conditions, safer environments and higher job satisfaction--to quantify Quantify - A performance analysis tool from Pure Software. the longer-term or indirect benefits has become increasingly significant. These longer-term benefits may stem from enhanced management performance through better and timelier information, an improved decision support capability or a reduction in the number of meetings because of better communication. Integration of IT systems, enhanced security and improved relationships with suppliers also are drivers of more indirect, longer-term benefits. These benefits will not always clearly translate into short-term profits, but they should ultimately lead to either cost savings or increased revenues. The transformation of these internal outputs to monetary terms is illustrated in exhibit 4, page 74. Generally, cost savings from IT, which traditionally applied primarily to staff displacement displacement, in psychology: see defense mechanism. Same as offset. See base/displacement. , now can be traced to reduced employee overtime, less need for specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. and more expensive staff, and reduced travel costs. All sources of time savings--such as less searching for information, fewer phone calls and queries and reduced order processing time--lead to cost savings and potentially to increased sales. Improved quality control saves cost by reducing rework, rejections at final inspection, mistakes in invoicing in·voice n. 1. A detailed list of goods shipped or services rendered, with an account of all costs; an itemized bill. 2. The goods or services itemized in an invoice. tr.v. and delivery, customer returns and help-desk requirements. These improvements originate o·rig·i·nate v. 1. To bring into being; create. 2. To come into being; start. from reduced capital and maintenance costs for new equipment and enhanced inventory-control systems that lead to savings on cash flow and reduced inventory, floor space and employee time. With respect to additional revenues, some systems make it possible to introduce new products, to develop products faster and in a more focused manner or to provide economic justification for previously unacceptable products. Improved asset utilization also can lead to potential increases in production and consequently in revenues. But external outputs, such as channel optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. , customer acquisition, customer loyalty and adding value, are more directly related to creating business value. Thus, translating these benefits into monetary value shouldn't should·n't Contraction of should not. shouldn't should not shouldn't should be a difficult task. But metrics for customer satisfaction, acquisition and loyalty must be chosen carefully. Customer approval ratings that are based on satisfaction surveys, for example, are more of a leading indicator Leading Indicator A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the economy, but are not always accurate. of customer satisfaction and represent a customer wish list more than they do real requirements. Also, while the customer acquisition rate can be an important indicator, the best signs of customer satisfaction may be the customer retention ratio, the ratio of serious customer complaints to quantity of services and products provided, and the level of increased spending per retained customer. KNOW WHERE YOU BEGAN Before implementing the model, establish baseline The horizontal line to which the bottoms of lowercase characters (without descenders) are aligned. See typeface. baseline - released version indicators for each performance measure you intend to track. This will enable you to draw conclusions about the actual benefits of your IT initiatives. With more historical data from within your organization and from other organizations, you can establish benchmarks and use them to objectively evaluate the results your IT projects achieve. It's essential that you identify and measure the present and future marginal costs Marginal cost The increase or decrease in a firm's total cost of production as a result of changing production by one unit. marginal cost The additional cost needed to produce or purchase one more unit of a good or service. and benefits of IT initiatives in order to have a comprehensive and objective calculation of the ROI of your IT initiative. In particular, disruption costs that are associated with the adoption of IT initiatives typically are significant and require a thorough evaluation. Getting real business value from an IT initiative begins with a structured and careful examination of costs, benefits and risks from the initial feasibility through postimplementation. Companies need to pay continuous attention to asset tracking, usage data, total cost of ownership and IT performance measurement. By using some forethought fore·thought n. 1. Deliberation, consideration, or planning beforehand. 2. Preparation or thought for the future. See Synonyms at prudence. and a structured approach, CPAs can convert diverse and often imprecise im·pre·cise adj. Not precise. im  pre·cisely adv. data into coherent and measurable
management strategies. That, in turn, can help management choose the IT
investments that will boost profitability and--almost as important--pay
for themselves.
Note: This article is related to one the authors wrote for the February 2005 issue of CMA CMA - Concert Multithread Architecture from DEC. Management magazine and is based on Evaluating Performance in Information Technology, one of a series of Management Accounting Guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. published by the AICPA and the Society of Management Accountants of Canada (CMA-Canada). TALK IS CHEAP--BUT CAN BE COSTLY Nine of 10 executives agreed that information technology could create significant competitive advantages, but only 6 of 10 agreed that their organization's IT spending was completely aligned with its business strategy. Source: Management Tools and Trends survey, Bain & Company www.bain.com, 2005 Practical Tips * Understand relationships between inputs, such as corporate strategy and systems, and outputs, such as time savings and customer satisfaction. * Because the benefits of IT investments increase over time, calculate ROI yearly throughout the life of the project. * Choose customer satisfaction. acquisition and loyalty metrics carefully. Customer approval ratings based on satisfaction surveys, for example, are more of a customer wish list than real requirements. * Before implementing the IT Contribution Model, establish baseline indicators for the specified performance measures so you can draw conclusions about the actual benefits of IT initiatives. * To maintain your IT budget's return on investment, pay ongoing attention to asset tracking, usage data, total cost of ownership and IT performance measurements. AICPA RESOURCES Special Interest group The AICPA Information Technology (IT) Membership Section is an AICPA voluntary membership section for CPAs who want to maximize their IT skills in order to increase efficiency and boost profits (http://info tech.aicpa.org/Memberships/ Information+Technology+ Membership+Section+Overview.htm). Credential credential verb To determine or verify titles, qualifications, documents, completion of required training, and continuing education, in those persons who function in a professional or official capacity–eg, ER physician, neurosurgeon, etc. Cf Credentials. Certified Information Technology Professional Certified Information Technology Professional (CITP) is a Certified Public Accountant recognized for their technology expertise and unique ability to bridge the gap between business and technology. (CITP (Certified Information Technology Professional) A specialty credential awarded by the AICPA to its CPA members who excel in the provision of technology-related business services. ) designation. A CITP is a CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. credentialed cre·den·tial n. 1. That which entitles one to confidence, credit, or authority. 2. credentials Evidence or testimonials concerning one's right to credit, confidence, or authority: as a technology professional and recognized for his or her unique ability to bridge the gaps between business and technology, Information about the program and applying for it is available at http:// infotech.aicpa.org/Memberships/The+ Certified See certification. +Information+Technology+ Professional+Credential.htm. Conference Tech 2006: The AICPA Information Technology Conference Hilton Austin Austin, Texas June 12-14, 2006 Publication Management Accounting Guideline, Evaluating Performance in Information Technology (paperback, # 030000JA; download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. , # 030000PDFJA). For more information or to order, go to www.cpa2biz biz n. Informal Business. biz Noun Informal business Noun 1. .com or call the Institute at 888-777-7077. Marc J. Epstein is Distinguished Research Professor of Management at Jones Graduate School of Management at Rice University in. Houston. His e-mail address See Internet address. e-mail address - electronic mail address is epstein@rice:edu. Adriana Rejc Buhovac is assistant professor on the Faculty of Economics at the University of Ljubljana The University of Ljubljana (in Slovenian, Univerza v Ljubljani; in Latin, Universitas Labacensis) is the first and the largest university in Slovenia; with 56,000 enrolled students, it ranks among the biggest universities in the world. , Slovenia. Her e-mail address is adriana. rejcbuhovac@ef.uni-lj.si.
Exhibit 2 Examples of Metrics
USEFUL YARDSTICKS
Corporate strategy * Number of IT projects
in the strategic plan
Corporate structure * Level of empowerment to
strategic business unit
and functional managers
Corporate systems * Percentage of business
processes documented
and measured
Resources * Dollars available for
IT staff training
and development
External environment * Number of potential
threats relating to
IT from external
environment
Processes
Leadership * Percentage of senior
executives' time
dedicated to IT
Creation and * Availability and planning
execution of for IT security features
appropriate
IT strategies * Planned cost of
disruption of IT initiatives
* Planned cost of risk
related to IT projects
Designing and * Percentage of IT expenses
implementation related to outsourcing
of a proper
IT structure * Number of IT applications
not fully integrated into
the overall IT system
Development and * Number of IT professionals per employee
implementation of
appropriate * Dollars invested in IT skills and knowledge
IT systems
* Percentage of staff with pay-for-
performance compensation
* Percentage of projects' evaluations
based on R01 metrics
Internal outputs
Increased productivity * percentage increase in
production output per employee
* Dollar' increase in sales based
on productivity improvements
Time savings * Reduction in online response time
Increased * Fixed costs per unit of capacity
capacity utilization
* Percentage of utilization of databases
Improved quality * Dollars saved on prevention
and appraisal cost of quality
Direct IT cost savings * Percentage reduction in
mandatory IT expenses
External outputs Performance measures
Channel optimatization * Dollar value of activities
completed through Web sites
* Hours of annual Web site downtime
Customer acquisition * Number of new customers
gained through IT innovation
* Sales from new customers
Customer loyalty * Sales from relined
Added value customers vs, new customers
* Average customer profitability
Outcomes Performance measures
Long-term * Percentage change in company stock price
financial success attributable to IT initiatives
* R0I
Short-term * Cash-flow growth
financial success
* Percentage of overall cost reduction
Exhibit 3
Examples of an IT ROI Calculation
1 Calculate the monetary value of IT initiative benefits
Outputs Benefits Monetary
value
Increased Increased profits from $60,000
productivity new customers (number of new
customers (50) x average
customer profitability
($1,200))
Time savings (2 hours per week x $400,000
50 work weeks in a year x
average labor cost per
hour ($40) X 100 employees)
Increased Cost savings $50,000
productivity
Improved quality Increased on-time $10,000
deliveries reducing
cost of grievances
Direct IT Reduced hours of system $40,000
cost savings downtime (10 hours saved
x average labor cost per
hour ($44) x 100 employees)
Channel Increased profits from $310,000
optimization, existing customers (increased
customer loyalty average existing customer
value creation profitability by $1,000 X
310 customers)
Total benefits $670,000
2 Calculate the total costs of IT Initiative
Costs
Front-end direct Hardware, software, $350,000
costs of installation and
IT initiative configuration
costs and overhead
Disruption costs Hours lost because of $20,000
related to IT training (5 hours per
human factors employee x average
labor cost per hour ($40) x
100 employees)
Disruption Technical disruptions, $24,000
costs related to resulting in lost
organizational orders and lost
factors customers (20 customers X
average existing customer
profitability ($1,200))
Costs of risk Development and $6,000
mitigation implementation of IT
performance framework
Total capital costs $400,000
Operating costs Direct IT operation $30,000
of IT initiative costs, maintenance
costs ($2,500 per
month x 12 months)
Total operating costs $30,000
3 Calculate the IT
initiative ROI
Total benefits - Operating costs / Capital costs (Investments)
x 100 = $870,000 - $30,000/$400,000 = 210%
Exhibit 4
Does IT Pay Off?
CALCULATING MONETARY BENEFITS FROM IT INITIATIVES
Outputs Benefits
Increased An IT infrastructure upgrade improves
productivity productivity of a manufacturing operator
whose labor costs are tied to operating
hours.
Time savings An IT project reduces labor involvement
in IT programs.
An IT project eliminates bottlenecks in
production and delivery, resulting in
increased on-time deliveries.
Increased Infrastructure enhancement (for example,
capacity use of satellite communications) optimizes
utilization the use of existing resources, such as
transportation vehicles.
Improved An IT project enhances manufacturing
quality quality, resulting in:
Lower preventive and appraisal cost of
quality.
Less scrap and waste.
Direct Integration of the organization's IT systems
cost with those of its global customers and dealers.
savings
An IT initiative to increase informationv
systems security.
A program of consolidation and
standardization across a range of hardware
database, communications and applications
systems reduces IT expenses.
Monetary
Outputs value
Increased Calculate the unit labor cost of the
productivity operation. The increase in output
multiplied by the unit labor cost is
the added value of the IT upgrade.
Time savings Multiply the hours saved by the
labor cost per hour plus benefits.
If the' result is a reduction in
grievances, use the average cost
per grievance to estimate the benefits,
Increased Benefits arising from increased turns
capacity (that is, journeys from the production
utilization facility to the customer and back) are
equal to additional sales minus direct
variable costs.
Improved Multiply the number of hours saved by
quality the standard wage, adjusted by a
benefits factor.
Calculate the savings in costs of r
defective products by subtracting their
salvage value from the total cost
incurred at the point the defect is
identified.
Direct Calculate the reduction in
cost administrative costs.
savings
Reduced hours of system downtime
(multiply the hours saved by the
average hourly productivity) and
reduced fraud incidence (estimate the
financial damage caused by fraud)..
Benefits equal to reduced IT expenses
(cost of operating and maintaining the
IT system).
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