What is the purpose of a Cost/Benefit Analysis in IT?

The primary purpose of a Cost/Benefit Analysis in IT is to evaluate the costs associated with implementing a particular solution against the expected benefits that solution will provide. This process helps organizations to make informed decisions by quantifying financial implications and weighing them against anticipated advantages.

In practical terms, a Cost/Benefit Analysis allows IT management to assess whether the investment in a new technology, process, or system is justified based on its potential return on investment (ROI). It encourages careful consideration of costs such as software licensing, hardware purchases, ongoing maintenance, and operational changes in relation to the expected improvements in efficiency, security, and productivity. This approach aids in prioritizing projects that offer the maximum benefit for the expenditure incurred, contributing to more strategic resource allocation within the organization.

By focusing on balancing financial input against anticipated outcomes, organizations can avoid unnecessary expenditures and ensure that they are pursuing initiatives that align with their strategic goals and financial health.