Finance for IT people

Soon I will add a few posts to describe three financial concepts that all IT people should know:

1. Time value of money: the value of a dollar changes with time. When analyzing projects you need to take this into account.
2. Net Present Value of a project: A way to compare projects to literally see which gives you the most bang for the buck.
3. Project Payback: How long will it take for a project to pay for itself.

Learning these concepts is important because they help bridge the gap between business and technical, which increases your value to the business. In a business setting, with some exceptions, there is no room to implement technology for technology’s sake alone. New technology has to create tangible value, intangible value, or both. The three methods above can quantify tangible value.