In reviewing the customer's IT organization, you must determine the corporate model for IT funding. Which two models would you encounter in this scenario? (Choose two.)

Question

Options

• Adirect revenue model
• Bcost center
• Cprofit center
• Dinvestment center

• A
  10% (3)
• B
  87% (26)
• D
  3% (1)

Explanation

Cost center (B) and profit center (C) are the two dominant corporate models for IT funding. A cost center treats IT as an overhead expense - the department consumes budget but doesn't generate revenue directly; funding comes from the broader business. A profit center treats IT as a revenue-generating unit that charges internal or external customers for services, with the goal of breaking even or turning a profit.

Why the distractors are wrong:

• Direct revenue model (A) is not a standard corporate IT funding classification - it describes a sales mechanism, not an organizational funding structure.
• Investment center (D) is a real accounting concept (a unit evaluated on ROI), but it is not one of the two primary IT funding models taught in enterprise IT frameworks like ITIL or standard IT governance curricula.

Memory tip: Think of the two models as opposites on a financial spectrum - a cost center IT org asks "how do we minimize spend?" while a profit center IT org asks "how do we generate revenue?" If IT sends invoices, it's a profit center; if IT just gets an allocated budget, it's a cost center.

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