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A Cost Model for the IT Department
Keywords
cost model, IT Department cost model, Activity-Based Costing, cost object, Cost drivers
Abstract
Traditionally, it is believed that a busy IT Department (Information Technology Department) of an organization, with many services offered for other departments is very profitable, or at least “cost-effective”. A real and precise calculation of costs per product or service have unveiled that the above is not necessarily true. Activity-Based Costing is a costing model that could assign precise costs to products and services. The combination of this method with the model for calculating the total cost of an IT Department, proposed by HP Laboratories in [ ] is a powerful tool for improving IT services.