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This framework provides management with a structure to measure and control information technology in accordance with generally accepted criteria incorporated in the guideline Control OBjectives for IT (COBIT) published by the Information Systems Audit and Control Association (ISACA).



PO05  Strategic Information Technology Plan
Control over the IT process of ...
managing the IT investment
    that satisfies the business requirement
    to ensure funding and to control disbursement of financial resources
     
      is enabled by
      • a periodic investment and operational budget established and approved by the business

        and takes consideration

        • funding alternatives
        • clear budget ownership
        • control of actual spending
        • cost justification and awareness of the total cost of ownership
        • benefit justification and accountability for benefit fulfillment
        • technology and application software life cycles
        • alignment with enterprise business strategy
        • impact assessment
        • asset management
           

Record of Assessment
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  Control Objective:
Managing the IT investment. 
*
 Annual IT operating Budget
*
 Cost and Benefit Monitoring
*
 Cost and Benefit Justification
 NOTES: (works best with IE)
  Conclusions:
* Non-existent 
There is no awareness of the importance of IT investment selection and budgeting. There is no tracking or monitoring of IT investments and expenditures.
* Optimised 
Benefits and returns are calculated in both financial and non-financial terms. Industry best practices are used to benchmark costs and identify approaches to increase the effectiveness of investments. Analysis of technological developments is used in the investment selection and budgeting process. There is a continuous improvement process in place. Investment decisions incorporate price/performance improvement trends, supported by new technologies and products. Funding alternatives are formally investigated and evaluated within the context of the organisation's existing capital structure, using formal evaluation methods. There is proactive identification of variances. An analysis of the long-term cost of ownership is incorporated in the investment decisions. The investment process recognises the need to support long-term strategic initiatives by creating new business opportunities through the use of technology. The organisation has a well-understood investment risk policy regarding the lead or lag use of technology in developing new business opportunities or operational efficiencies.
* Managed and Measurable 
Responsibility and accountability for investment selection and budgeting is assigned to a specific individual. Budget variances are identified and resolved. IT staff have the expertise and skills necessary to develop the IT budget and recommend appropriate IT investments. Formal costing analyses are performed covering direct and indirect costs of existing operations, as well as of proposed investments, using total cost of ownership concepts. A proactive and standardised process for budgeting is used. The shift in development and operating costs from hardware and software to systems integration and IT human resources is recognised in the investment plans.
* Defined Process 
The IT investment selection and budgeting processes are reasonably sound and cover key business and technology issues. Investment selection and policy is defined, documented and communicated. The IT budget is aligned with the strategic IT and business plans. The budgeting and IT investment selection processes are formalised, documented and communicated. Informal self-training is occurring. Formal approval of IT investment selections and budgets is taking place. The balance between the investments in human resources, hardware, systems software and application software is defined and agreed upon in order to leverage technological developments and the availability and productivity of IT professionals.
* Repeatable but Intuitive 
There is an implicit understanding of the need for IT investment selection and budgeting. The need for a selection and budgeting process is communicated. Compliance is dependent on the initiative of individuals in the organisation. There is an emergence of common techniques to develop components of the IT budget. Reactive and tactical budgeting decisions occur. Expectations based on trends in technology are beginning to be stated and their impact on productivity and system life cycles are starting to be considered in investment decisions. 
* Initial / Adhoc 
The organisation recognises the need for managing the IT investment, but this need is communicated inconsistently. There is no formal allocation of responsibility for IT investment selection and budget development. Perceived significant expenditures require supporting justifications. Isolated implementations of IT investment selection and budgeting occur, with informal documentation. IT investments are justified on an ad hoc basis. Reactive and operationally focused budgeting decisions occur.
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