Hubbell Policies

The development of internal use software is divided into three stages, the Preliminary Project Stage, Application Development Stage, and Post Implementation/Operation Stage. Preliminary Project Stage – Internal and external costs incurred during the preliminary project stage should be expensed as incurred. The preliminary project stage includes the following activities; Conceptual formulation of alternatives, evaluation of alternatives, determination of existence of needed technology, and the final selection of alternatives. Application Development Stage – Certain costs incurred during the application development stage should be capitalized The application development stage includes the following activities; design (once a path has been chosen) including software configuration and interfaces, coding, installation of hardware, and testing including parallel processing. The following types of costs should be capitalized during the Application Development Stage. • External direct costs of materials and services consumed in developing or obtaining internal-use software (including purchased software and consultants’ fees). • The cost to develop or obtain software that allows for access or conversion of old data by new systems may be capitalized. The cost of actually converting that data to the new system may not be capitalized (see discussion below). The following costs incurred during the Application Development Stage must not be capitalized and should be expensed as incurred. • Payroll and payroll-related costs of Hubbell employees. • Training costs incurred during the Application Development Stage must be expensed as incurred. • The allocation of employee (i.e., salaries, benefits) not 100% dedicated to the software project or other indirect general or overhead are not capitalized and should be expensed as incurred. • Costs associated with the process of converting data from old systems to new systems should be expensed as incurred. Post Implementation/Operation Stage – Internal and external costs expensed as incurred, upgrades/enhancements may be capitalized with prior approval Activities in the post implementation/operation stage will include training and application maintenance. • Internal maintenance costs including those maintenance costs incurred to extend the useful life of existing internal use software must be expensed as incurred. External maintenance costs should be expensed over the maintenance contract period on a straight-line basis. • Strictly with advance written approval from the Corporate Controller’s office, the cost of specific upgrades and enhancements to existing internal use software that provide additional functionality may be capitalized following the same requirements as a new software project (i.e., no capitalization during the preliminary project stage, certain costs capitalized during the application development stage, etc.). This will include the expansion of existing internal use software to new locations or geographic areas. • All training costs (internal and external) must be expensed as incurred. • Payroll and payroll-related costs of Hubbell employees must be expensed as incurred.

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