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IT cost benchmarking: Drawing the right conclusions
Institution:1. Arthur J. Bauernfeind College of Business, Murray State University, 109 Business Building, Room 652H, Murray, KY 42071, U.S.A.;2. C. T. Bauer College of Business, University of Houston, 334 Melcher Hall, Room 270C, Houston, TX 77204-6021, U.S.A.;1. Glan Clywd Hospital, Bodelwyddan, Wales;2. Safdarjung Hospital, New Delhi 110029, India;1. Division of Pediatric Gastroenterology, Hepatology and Nutrition, Columbia University Irving Medical Center;2. NewYork-Presbyterian Morgan Stanley Children’s Hospital, New York;3. Department of Pediatrics, St. Barnabas Hospital, Bronx, New York;4. Division of Pediatric Gastroenterology, Hepatology, and Nutrition, Boston Children’s Hospital and Harvard Medical School, Boston, Massachusetts
Abstract:The use of managerial control ratios for benchmarking IT costs is widely accepted. This installment of Accounting Matters informs CIOs about IT managerial control ratios and the assumptions underlying the use of these ratios in IT cost benchmarking. Incorrect use of these ratios and violation of the assumptions can lead to faulty inferences and costly mistakes. This article proposes a technique for benchmarking IT costs to draw the right conclusions from the data.
Keywords:IT costs  IT spending  IT managerial control ratios  Benchmarking  Justification
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