【正文】 ets used up in the accounting period. It is charged in the cost accounts to ensure that the cost of capital equipment is reflected in the unit costs of the services provided using the equipment. There are various methods of calculating depreciation for the period: straightline, reducing balance, and by usage. Direct cost. A cost that is incurred for and that can be traced in full to a product, service, cost center, or department. This is an allocated cost. Direct costs are direct materials, direct wages, and direct expenses. Fixed cost. Fixed costs remain unchanged even as the level of resource usage varies. Fixed costs include any costs that are negotiated prior to the initiation of the service, such as maintenance contracts for hardware ponents. Indirect cost. A cost incurred in the course of making a product, providing a service, or running a cost center or department, but which cannot be traced directly and in full to the product, service, or department, because it has been incurred for a number of cost centers or cost units. These costs are apportioned to cost centers/cost units. Indirect costs are also referred to as overheads. Service Management Function 9 Net present value. The present value (NPV) method evaluates the present value of cash flows that result from the investment less the initial outlay. To determine the present value, the cash inflows and outflows are discounted to the present time using a discount rate with the following formula: Present Value = (Future Value) / (1+Discount Rate) n Operational costs. Those costs resulting from the daytoday running of the IT services section—for example, staff costs, hardware maintenance, and electricity—and relating to repeating payments whose effects can be measured within a short time frame, usually less than the 12month financial year. Payback period. Payback period measures the amount of time that it takes to repay the initial investment of an asset. The payback method is the initial investment cost divided by the anticipated annual savings or resulting increased revenue. Total cost of ownership. The total cost of ownership (TCO) is defined as the total cost of an item over its useful lifetime. TCO analysis attempts to include all of the direct and indirect costs. TCO includes not only the purchase price, but also implementation and training costs, management costs, and support costs. Variable cost. Costs can either be fixed or variable. Analyzing whether costs are variable is vital in calculating possible profits when business increases or decreases. Variable costs change over time in proportion to the resource usage. 4 Processes and Activities This chapter provides a detailed discussion of the processes and activities that occur in the Financial Management SMF. Process Flow Summary Financial management prises four main processes and a number of subprocesses, as follows: ? Cost accounting ? Service level agreements ? Cost classification ? Cost categorization ? Cost units ? Depreciation ? Cost accounting methods ? Project investment appraisals ? Net present value ? Payback period ? Return on investment ? Total cost of ownership ? Real cost of ownership (RCO) ? Budgeting ? Budgeting benefits ? Budget inputs ? Budget types ? Budgeting methods ? Budget review ? Cost recovery ? Transfer pricing methods ? Billing 12 Financial Management Cost Accounting Cost accounting is an inwardlooking activity that examines the actual costs of performing IT activities. It breaks down the costs associated with a particular activity and may assign these costs to a project or customer. It can also be used to measure the efficiency of the IT department. Cost accounting basically does the following: ? Allows IT departments to track costs and to make informed decisions about how to best achieve cost savings related to IT activities. ? Allows IT departments to quantify and understand their costs. ? Helps users feel in control of costs and understand how the costs are being allocated. This reduces customer frustration and confusion. ? Assists managers in planning and controlling the operation of the IT anization. ? Cost accounting and cost management may protect the IT department from costbased attacks from outside vendors. To be effective, the accounting activity must be able to track the life cycle costs of all IT assets and to have a system for recording and tracking these costs. Life cycle costs include costs for procurement, maintenance, and disposal of IT ponents. The configuration management database (CMDB), which is a tool used in the configuration management process, can be used to facilitate cost recording and tracking. For more information on the CMDB, see the MOF Configuration Management Service Management Function guide. Accurate cost data is necessary in order to accurately and fairly charge customers. Based on the assignment of costs to departmental anizations, prices of IT services can be established and charged to the appropriate department. Customer charging typically falls into one of three categories: ? Information only. Costs are not passed on to customers. Using this method IT departments do not recover their costs from other departments but receive their fiscal budget from the enterprise. Costs are typically tracked to evaluate service performance and provide input to corporate budgeting for capital investment decisions, personnel training, and the purchase of consumables. The drawback of this method is that it does not influence user and departmental behavior. Users are more inclined to request IT services and use the services provided without considering the costs associated with providing those services. This method typically results in greater operational costs, yet at the same time does not require the overhead costs