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Managing
IT Projects
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IT Investment Summary
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GO BACK
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EXPLANATORY NOTES
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1 |
Type of IT Investment |
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Investments in IT can be categorised into one or more of the following
groups. Sometimes the IT project appears to below to more than one
group. In such cases, you should assign the project to the category that
best reflects the project's impact on the organisation. |
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DESCRIPTION |
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RISK |
| A |
Infrastructure - these IT investments are essential to
the business's future but do not directly help the company achieved its
long-term corporate goals. Such projects might include network cabling,
the roll-out of a new application development environment or the establishment
of facilities required by legislation or imposed by customers. |
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Minimal risk; low return |
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| B |
Cost Reduction - these are the most common type of projects
and are aimed at cutting the organisation's costs |
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Modest risk; modest return |
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| C |
Performance Improvement - these projects attempt
to add value (i.e. advantage) to the organisation's performance. Projects
might also include improvements to customer service. |
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Moderate risk; significant return |
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| D |
Strategic - these projects are rare as they enable
the organisation to make profound changes in the services they offer or
in the ways they operate. An example of such a project might be the
introduction of on-line retailing. |
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High risk; high return |
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2 |
Economic Life of IT Project |
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The economic life of an IT project is defined as being the period of time
that the project continues to produce improvements in profitability,
efficiencies or intangible benefits for the organisation. The economic
life may be shorter that the physical life of the project as the technology
could have a physical life beyond the period of benefits. |
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3 |
Development Costs |
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| TYPE OF COST |
Year 1
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Year 2
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Year 3
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Year 4
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Year 5
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TOTAL
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£ |
£ |
£ |
£ |
£ |
£ |
| People costs including in-house
staff, contractors and consultants. |
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| Training costs |
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| Hardware purchases |
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| Software purchases including
packages and additional user licenses |
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| Communications costs such as
cabling, hubs, routers, processors, software and call connection charges |
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| Financing costs including costs
of borrowing, interest charges, hire purchase charges, rentals or leasing |
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| Additional establishment costs
such as desks, storage or office re-fitting |
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| TOTAL COSTS |
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| CUMULATIVE TOTAL COSTS |
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| DISCOUNT VALUE (%'age) |
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| Discounted Cash Flows |
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4 |
Annual Running Costs |
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| TYPE OF COST |
Year 1
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Year 2
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Year 3
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Year 4
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Year 5
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TOTAL
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£ |
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| Hardware maintenance |
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| Software maintenance |
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| Help desk support |
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| Equipment repairs |
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| Upgrade or replacement of hardware |
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| TOTAL COSTS |
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| CUMULATIVE TOTAL COSTS |
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| DISCOUNT VALUE (%'age) |
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| Discounted Cash Flows |
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5 |
Life Time Savings |
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| TYPE OF SAVING |
Year 1
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Year 2
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Year 3
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Year 4
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Year 5
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TOTAL
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Description |
£ |
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| 2 |
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| 4 |
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| 5 |
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TOTAL SAVINGS |
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CUMULATIVE TOTAL SAVINGS |
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DISCOUNT VALUE (%'age) |
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Discounted Cash Flows |
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Tel 0131 668 2112
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