Tuesday, July 31, 2007

Should CIOs Capitalize Or Expense IT Investments?

Overview: CIOs frequently wonder whether to capitalize or expense an IT investment initiative. Often these decisions are made with insufficient financial analysis — it is not as simple as doing the math and making the call on a standalone basis for individual projects. The consequence of flawed decisions can get in the way of the company's ability to make future investments with highly worthwhile initiatives by mortgaging its future with deferred obligations based on unrealistic depreciation periods and residual values. CIOs must provide input to, and work closely with, the CFO and treasurer before finalizing these decisions.


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