U5 Responses

Response 1.) Leadership changes and economic downturns provide perfect opportunities to reexamine the IT Strategy according to the textbook (High, 2014, pp. 176, 177). New leaders often want to put their stamp on the organization so it only makes sense to utilize this opportunity to take inventory of the organization as part of their orientation. Leadership changes also provide an organization with an opportunity to set new goals and key performance indicators.

Economic downturns also require self-examination within an IT department. Priorities will change as resources become scarce. In general, economic downturns give the entire company an opportunity to streamline operations. By their nature, economic downturns require companies to examine both expense and income projections and resources.

References

High, P. A. (2014). Implementing World Class IT Strategy: How IT Can Drive Organizational Innovation (1st edition). Jossey-Bass.

Response 2.) US tax agencies view capital and operational expenses differently. Capital expenses that can serve as investments to increase a company’s operating efficiency can be declared as capital expenses, and the company can receive tax credits for research and development activities (Voigt & Moncada-Paternò-Castello, 2009).

Operational expenses, on the other hand, represent the cost of doing business. In the IT Department, expense projects include activities related to system maintenance and IT support activities. Unlike Capital expenses, Operating expenses do not have a net positive effect on the company’s capabilities. Companies must effectively manage both operational expenses and capital expenses while improving overall output (Peslak, 2013).