Value cost impact analysis: Estimating the IT cost impact of business developments

Abstract

Predicting the cost of IT infrastructure for a dynamically developing organization is difficult due to the complexity of understanding which IT infrastructure costs are driven by what kind of organizational developments. This is relevant in particular for organizations that spend a high proportion of their revenue on IT as well as for outsourcers who commit to providing IT infrastructure in innovative business models such as billing a percentage of a client's revenue. However, the creation of a detailed model of business developments driving IT costs for a particular organization is cost prohibitive in most cases due to extensive data gathering efforts. This paper proposes an approach based on the customization of default cost models assigning IT infrastructure cost categories to major business functions dependent on specific business metrics. This approach enables a cost effective way of estimating IT delivery costs dependent on a business's development. © 2013 IFIP.