IT Controlling: From IT cost and activity allocation to smart controlling

Foreword
Preface to the Second Edition
Contents
1: Digitization: Changing Framework Conditions in Work and Society
	1.1	 Clarification of Terms
	1.2	 Effects of Digitalisation
		1.2.1	 Paradigm Shift and Change in Work
			1.2.1.1	 From Automation to Digitalization
			1.2.1.2	 Digitalization and Human Work
			1.2.1.3	 Digitalization and Entrepreneurial Success
			1.2.1.4	 Digitalization and Vertical Integration
		1.2.2	 Digital Business Model Changes
	1.3	 Impact on Occupational Profiles
		1.3.1	 General Changes
		1.3.2	 Design of the Work
			1.3.2.1	 Digital Leadership Competence
		1.3.3	 From IT Management to Chief Information and Digital Officer (CIDO)
			1.3.3.1	 EDP Manager/IT Manager/IT Head of Department
			1.3.3.2	 CIO
			1.3.3.3	 CPO
			1.3.3.4	 CIPO
			1.3.3.5	 CDO
		1.3.4	 Classical Versus Agile Information Management
	1.4	 Summary
	References
2: IT Controlling Concept: General Conditions, Basics and Central Terms
	2.1	 Mission Statement IT Controlling
	2.2	 Quick Test IT Controlling: Self-Assessment
	2.3	 IT Controlling
		2.3.1	 Clarification of Terms
			2.3.1.1	 IT Controlling Must Be Adapted
			2.3.1.2	 IT Controlling Must Balance and Moderate
			2.3.1.3	 Controller = Helmsman or Helmswoman
			2.3.1.4	 IT Controlling as a Business Task
		2.3.2	 Tasks
			2.3.2.1	 Task Profiles
		2.3.3	 Methods and Tools
			2.3.3.1	 Comprehensive Methods
			2.3.3.2	 Operational Methods
			2.3.3.3	 Strategic Methods
		2.3.4	 Organisational Concepts
			2.3.4.1	 Role Assignments
			2.3.4.2	 CIO as Decision Maker
			2.3.4.3	 IT Controller as Independent Advisor to the CIO
			2.3.4.4	 IT Controlling as a Service and Monitoring Instance
			2.3.4.5	 Partnership Model
			2.3.4.6	 Employee Model
			2.3.4.7	 Controlling Model
			2.3.4.8	 Organizational Concepts in Practice
		2.3.5	 Reasons for IT Controlling
			2.3.5.1	 Complexity
			2.3.5.2	 Project Organization
			2.3.5.3	 Transparency
			2.3.5.4	 Cloud Computing
		2.3.6	 Smart IT Controlling
			2.3.6.1	 Use of Data Science Tools in IT Controlling
	2.4	 Summary
	References
3: From IT Strategy to Digital Strategy: From Classic IT Strategy to Digital Strategy
	3.1	 Classical Notion of IT Strategy
	3.2	 Contents of IT Strategies
		3.2.1	 IT Strategy Characteristics
		3.2.2	 Empirical Content of IT Strategies
	3.3	 From IT Strategy to Digital Strategy
		3.3.1	 Digital Business Strategy
		3.3.2	 IT Strategy Patterns
	3.4	 IT Architecture Planning
	3.5	 Case Study on the Development of a Digital Strategy
		3.5.1	 IT Strategy/Digital Strategy
		3.5.2	 IT Architecture Planning
		3.5.3	 IT Organization
		3.5.4	 Data Center
		3.5.5	 Cooperation with External Service Providers
		3.5.6	 Task
	3.6	 Summary
	References
4: Control of the IT Strategy with the Balanced Scorecard: Implementing and Managing IT Strategies and Digital Strategies
	4.1	 Basics of the Balanced Scorecard
		4.1.1	 Historical Development
		4.1.2	 Methodology
		4.1.3	 Traditional Performance Measurement Systems Versus Balanced Scorecard
	4.2	 Adaptation for IT Controlling
		4.2.1	 Implementation Concept
		4.2.2	 Practical Example of a Research Institution
		4.2.3	 Cascaded Overall System
		4.2.4	 Key Questions of an IT Balanced Scorecard
		4.2.5	 Financial Perspective
		4.2.6	 Process Perspective
		4.2.7	 Staff Perspective
		4.2.8	 Customer Perspective
		4.2.9	 Use in Practice
		4.2.10	 Practical Example Daimler-Benz
	4.3	 Evaluation of the Methodology
	4.4	 Exercise on the IT Balanced Scorecard
		4.4.1	 Task
	4.5	 Summary
	References
5: IT Portfolio Management: Manage IT Project Selection
	5.1	 IT Portfolio Management as Part of IT Governance
		5.1.1	 IT Architecture and IT Portfolio Management
		5.1.2	 IT Governance and IT Portfolio Management
	5.2	 Concept of IT Portfolio Analysis
		5.2.1	 Target Projects
		5.2.2	 Must-Do Projects
		5.2.3	 Standard IT Projects
		5.2.4	 Life Cycle Model
		5.2.5	 Selected Research Approaches
	5.3	 Critical Success Factors and Introduction
	5.4	 Case Study on the Prioritisation of Digitisation Projects
	5.5	 Evaluation of IT Security Projects
		5.5.1	 Problem
		5.5.2	 Project Types for IT Security Projects
		5.5.3	 Insurer Project (Insurer)
		5.5.4	 Enabler Project (Enabler)
		5.5.5	 Optimizer Project (Optimizer)
		5.5.6	 Solution Concept RoSI
	5.6	 Case Study on Project Selection
		5.6.1	 Scenario
		5.6.2	 Project List
		5.6.3	 Task
		5.6.4	 Proposed Solution
	5.7	 Summary
	References
6: IT Investment Calculation and Total Cost of Ownership Analysis: IT Standards as a Tool for IT Controlling
	6.1	 Business Methods of Investment Appraisal
		6.1.1	 Overview of Methods
			6.1.1.1	 Static Methods of Capital Budgeting
			6.1.1.2	 Comparative Costing
			6.1.1.3	 Profit Comparison Statement
			6.1.1.4	 Profitability
			6.1.1.5	 Static Amortization Period
			6.1.1.6	 Dynamic Methods of Investment Calculation
			6.1.1.7	 Net Present Value (NPV)
			6.1.1.8	 Annuity
			6.1.1.9	 Internal Interest Rate
			6.1.1.10	 Dynamic Payback Period
		6.1.2	 Static Procedures
			6.1.2.1	 Cost Comparison
			6.1.2.2	 Profit Comparison
			6.1.2.3	 Profitability Comparison
			6.1.2.4	 Payback Period
		6.1.3	 Net Present Value Method
		6.1.4	 Utility Analysis
			6.1.4.1	 Application Example for the Utility Analysis in Outsourcing Decisions
		6.1.5	 Real Options Valuation
			6.1.5.1	 Option
			6.1.5.2	 Options
			6.1.5.3	 Example: Use of Real Options in IT Projects
	6.2	 Special Methods of IT Investment Accounting
		6.2.1	 Total Cost of Ownership (TCO)
		6.2.2	 Total Economic Impact (TEI)
		6.2.3	 Rapid Economic Justification (REJ)
		6.2.4	 Total Value of Opportunity (TVO)
		6.2.5	 Business Value Index (BVI)
		6.2.6	 Economic Efficiency Analysis (WiBe)
		6.2.7	 Cranfield’s Benefits Management (CBM)
		6.2.8	 Val-IT Framework
	6.3	 Total Cost of Ownership (TCO)
		6.3.1	 Concept of the TCO Approach
			6.3.1.1	 Basic Idea
			6.3.1.2	 Selected TCO Definitions
			6.3.1.3	 Cost Categories
			6.3.1.4	 Purchase Price < Total Cost
			6.3.1.5	 Direct Costs
			6.3.1.6	 Indirect Costs
			6.3.1.7	 Technical Improvements
			6.3.1.8	 Standardization of IT Components
			6.3.1.9	 Organizational Improvements
		6.3.2	 Evaluation of the TCO Approach
			6.3.2.1	 Advantages of the TCO Model
			6.3.2.2	 Disadvantages of the TCO Model
		6.3.3	 Case Studies on TCO Analysis
			6.3.3.1	 Case Study TCO System Failure ERP System
				Output Data
				Task
				Possible Solution
			6.3.3.2	 Case Study TCO New Storage System
				Output Data
				Costs of Acquisition and Commissioning
				Costs of Use
				Additional Information
				Possible Solution
	6.4	 Summary
	References
7: IT Standards: IT Standards as a Tool for IT Controlling
	7.1	 IT Governance
	7.2	 IT Standards as an Approach to TCO Reduction
		7.2.1	 QUERTY: The Oldest IT Standard in the World
		7.2.2	 Net Effect Goods
		7.2.3	 Standardization Fields
		7.2.4	 Introduction and Enforcement
	7.3	 Summary
	References
8: Project Controlling with Earned Value Analysis: Plan, Monitor and Control Projects
	8.1	 Project Controlling
		8.1.1	 Pre-study
		8.1.2	 Project Application
		8.1.3	 Project Start
		8.1.4	 Actual Recording
		8.1.5	 Target Concept
		8.1.6	 Implementation
		8.1.7	 Project Completion
		8.1.8	 Project Calculations
	8.2	 Structure of the Earned Value Analysis
		8.2.1	 Project Management
		8.2.2	 Basic Data
		8.2.3	 Key Figures
		8.2.4	 Prerequisites for Use
		8.2.5	 Use in Practice
		8.2.6	 Measurement of the Percentage of Completion
	8.3	 Application Examples
		8.3.1	 Developing a Website
			8.3.1.1	 Project History
			8.3.1.2	 Basic Data
			8.3.1.3	 Determination of the Key Figures
			8.3.1.4	 Overall Rating
		8.3.2	 App for Software Developers
			8.3.2.1	 Project History
			8.3.2.2	 Basic Data
			8.3.2.3	 Key Figures
			8.3.2.4	 Overall Rating
	8.4	 Reporting
	8.5	 Summary
		8.5.1	 Baseline Data
		8.5.2	 Key Figures
	References
9: IT Cost and Activity Accounting (IT-KLR): Numbers for Rational Decisions
	9.1	 Necessity and Objectives of IT Cost and Activity Allocation
		9.1.1	 Rising IT Costs
		9.1.2	 IT Cost Allocation Required
		9.1.3	 Goals of IT Cost and Activity Allocation
		9.1.4	 Three-Level Settlement
	9.2	 Methods of Charging IT Costs and Services
	9.3	 IT Cost Element Accounting
	9.4	 IT Cost Centre Accounting
		9.4.1	 Example of an IT Operations Accounting Sheet
	9.5	 IT Cost Unit Accounting
		9.5.1	 Product Costing
			9.5.1.1	 Example of IT Product Costing
		9.5.2	 Contribution Margin Accounting/Direct Costing
			9.5.2.1	 Example of a Contribution Margin Calculation for an IT Service Provider
	9.6	 Case Studies
		9.6.1	 Case Study Break Even Analysis “Cloud Versus On-Premise”
			9.6.1.1	 Initial Situation and Task
			9.6.1.2	 In-House/On-Premise
			9.6.1.3	 Fixed Costs
			9.6.1.4	 Variable Costs
			9.6.1.5	 Cloud Solution
		9.6.2	 Case Study Benchmarking “IT Consolidation”
			9.6.2.1	 Initial Situation and Task
			9.6.2.2	 Company A
			9.6.2.3	 Company B
			9.6.2.4	 Possible Solution
		9.6.3	 IT Cost and Performance Accounting Case Study
			9.6.3.1	 Initial Situation and Task
			9.6.3.2	 Possible Solution
		9.6.4	 IT Cost Management Case Study
			9.6.4.1	 Initial Situation and Task
			9.6.4.2	 Possible Solution
				M1: Reduction of IT Costs
				M2: Improving Cost and Performance Transparency
				M3: Optimisation of the Cost and Performance Structure
	9.7	 Summary
	References
10: IT Sourcing Controlling: Outsourcing of IT Services
	10.1	 Clarification of Terms
		10.1.1	 External Service Provision
		10.1.2	 Internal Service Provision
		10.1.3	 Scope of Outsourcing
		10.1.4	 Number of External Partners
		10.1.5	 Distance to the Client
		10.1.6	 Depth of Cooperation
		10.1.7	 Modernization
		10.1.8	 Degree of Outsourcing
		10.1.9	 Cloud Computing as the Focus of the Outsourcing Concept
	10.2	 IT Contract Management
	10.3	 IT Asset and Software License Management
	10.4	 Benchmarking and SLA Analyses
		10.4.1	 Expediency
		10.4.2	 Contents
		10.4.3	 Introduction of SLA
	10.5	 Summary
	References
11: IT Key Figure Based Reporting: IT Key Figures: Basis for Reporting
	11.1	 Key Figures in IT Controlling
	11.2	 Informative Value of IT Key Figures
		11.2.1	 Significance of the IT Key Figure “IT Costs/Revenue”
		11.2.2	 Check Criteria for Key Figures
		11.2.3	 Key Figure Profile
		11.2.4	 Benefits of IT Key Figures
	11.3	 IT Key Performance Indicator Systems
		11.3.1	 Concept Key Figure System
		11.3.2	 Requirements for Performance Measurement Systems
		11.3.3	 Swiss System of Key Data (SVD)
		11.3.4	 VIPS Indicator System
	11.4	 Important Key Figures for Practice
	11.5	 Summary
	References
12: Exercises: Examination Exercises for Training
	12.1	 Task 1 Job Description IT Controlling
		12.1.1 Task
		12.1.2	 Possible Solution
	12.2	 Task 2 IT Standards
		12.2.1 Task
		12.2.2	 Possible Solution
	12.3	 Task 3 Project Selection
		12.3.1 Task
		12.3.2	 Possible Solution
	12.4	 Task 4 Earned Value Analysis
		12.4.1	 The Project Takes the Following Course
		12.4.2	 Differences
	12.5	 Task 5 Organization of IT Controlling
		12.5.1 Task
		12.5.2	 Possible Solution
	12.6	 Task 6 Methods of IT Cost and Activity Allocation
		12.6.1 Task
		12.6.2	 Possible Solution
		12.6.3	 Discussion of the Methods
		12.6.4	 Decision
	12.7	 Task 7 Determination of Net Present Value
		12.7.1 Task
		12.7.2 Possible Solution (Table 12.1)
	12.8	 Task 8 Determining the Value in Use
		12.8.1 Task
		12.8.2		 Possible Solution (Table 12.2)
	12.9	 Task 9 Service Level Agreements
		12.9.1 Task
		12.9.2	 Possible Solution
	12.10	 Task 10 TCO Analysis
		12.10.1 Task
		12.10.2	 Possible Solution
	12.11	 Task 11 Analyze Data Center
		12.11.1 Task
		12.11.2	 Possible Solution
	12.12	 Task 12 IT Key Figures
		12.12.1 Task
		12.12.2	 Possible Solution
		12.12.3	 Assessment of the Key Figure “Training Costs/IT Staff”
		12.12.4	 Assessment of the Key Figure “Processed Fault Reports/Total Fault Reports