An IT manager is creating a business case to justify the investment required to replace existing technology with new cloud services to support a digital transformation strategy. What should be…

Question

Options

• AThe technology and resource costs of migrating to the cloud services
• BThe ongoing cost of maintaining and supporting the cloud services
• CThe estimated increase in revenue generated from sales of the new services
• DThe value that would be generated if the organization made a different investment

• A
  4% (1)
• B
  19% (5)
• C
  7% (2)
• D
  70% (19)

Explanation

Opportunity cost refers to the value of the best alternative forgone when a decision is made - so in a business case, it answers "what else could we have done with this money?" Option D captures this precisely: the section should describe what value the organization would generate by investing those same resources elsewhere, helping decision-makers weigh whether cloud migration is truly the best use of funds.

• A is wrong because migration costs belong in a cost/investment section, not opportunity cost - that describes what you spend, not what you give up.
• B is wrong because ongoing maintenance costs are operational expenditure (OpEx) line items, again part of the cost analysis, not opportunity cost.
• C is wrong because projected revenue from the new services belongs in the benefits or return on investment section of the business case.

Memory tip: Think of opportunity cost as the "road not taken" cost - it's always about the next best alternative, never about the costs or benefits of the chosen option itself. If a question mentions what you could have done instead, that's opportunity cost.

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