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Management article
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Reference no. 87102
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 1987

Abstract

Corporate information systems will be most effective when companies run them as profit centers. When information services (IS) operates as a business within a business, it must focus on meeting customer needs both efficiently and effectively. That way, IS contributes to a company''s profits and performance. Under profit-center control, users assume most of the responsibility for decisions about computer use and choice of technology. Pricing computer services at a figure other than cost allows them to judge IS efficiency and makes IS more responsive. Moreover, companies introduce new technology sooner and with better results, since users can better evaluate their needs than can a central IS function.

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Abstract

Corporate information systems will be most effective when companies run them as profit centers. When information services (IS) operates as a business within a business, it must focus on meeting customer needs both efficiently and effectively. That way, IS contributes to a company''s profits and performance. Under profit-center control, users assume most of the responsibility for decisions about computer use and choice of technology. Pricing computer services at a figure other than cost allows them to judge IS efficiency and makes IS more responsive. Moreover, companies introduce new technology sooner and with better results, since users can better evaluate their needs than can a central IS function.

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