Choosing the Right Funding Method for Your Information Systems Needs

Choosing the Right Funding Method for Your Information Systems Needs
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Choosing the Right Funding Method for Your Information Systems Needs
When it comes to funding information systems expenses, there are several methods that organizations can use. Three popular options include allocation, chargeback, and corporate budget. Each method has its pros and cons, and there are different situations in which one might be more appropriate.
Allocation is a method in which the costs of an information system are allocated across multiple departments or business units (CFI Team, 2022). This can be useful in situations where numerous departments benefit from the system, and it is not possible or practical to isolate the costs to a single department. By using this method, organizations can ensure that the costs are spread relatively and that all departments contribute to the expenses.
Chargeback, on the other hand, is a method that bills individual departments or business units for the specific costs they incur related to the information system (Segal, 2020). This method is more appropriate when the usage and benefits of the system can be...