Achieving Efficiency and Effectiveness through Systems

IS budgeting

The IS budget provides a reference point of efficiency at the firm level instead of the system level. An organization with relative less IS budget when comparing with similar organizations is considered to be more efficient since it achieves the same level of services (output) with less resource (input). The advantage of using IS budget as a reference is that the information needed can be obtained relatively easily from financial documentation.

IS budgets, as measure of efficiency, have some significant limitations however. For one, assuming that two organizations are very similar is an over-simplification of reality. Moreover, a firm's IS budget will depend on the systems it currently has, as well as the one it is currently developing.