Ismg 4 Essay Example | Topics and Well Written Essays - 500 words

Ismg 4 - Essay Example The question whether IT systems is an expense or an asset depends on the business being operated (Austin, Nolan and ODonnell 49). Some businesses need IT systems to help them in running their operations. However, some businesses can do well without IT systems. If IT systems lead to the high cost of a business, then the business should consider the systems as expenses (Austin, Nolan and ODonnell 50). However, if an IT system brings more profit to a firm than when it lacks the system, then the firm should consider the system as an asset. The purpose of cost allocation is to offer relief to shared services in an organization (Austin, Nolan and ODonnell 50). Allocating cost is similar to spreading the cost amongst those who use it. Firms allocate costs in order to assign accountability of those who use the cost, either a single department or numerous departments in the company. For instance, a firm, which offers complex IT systems, can allocate duty to various departments to people who have specialized in specific fields of IT. IT departments should have full control of spending with regards to IT systems. This is because every field of occupation knows best the cost of running their business (Austin, Nolan and ODonnell 51). IT departments should have their own system of administration separate from the whole company. This will enable the department to spend what is appropriate regarding their activities. It will also enable the department to avoid any financial hitches that might face the entire company since they control their own funds (Austin, Nolan and ODonnell 51). However, this is not to mean that the company should not monitor the spending of the department. The overall management should monitor the spending of the IT department to ensure that their spending is in line with the company’s objectives. There should be a percentage cost that an IT department can spend on the maintenance of their IT systems, and this should