The Question: I learned early on with the IMF while facilitating a meeting that if I have a long phone call I need to make I should just ask the question “is IT Chargeback is a good idea?” I could then leave the room and be sure the discussion was still going when I returned an hour later. The particularly good news on this topic, as opposed to function points for example, is that most IT executives can argue both sides.
Increasingly of late, there seems to be some consensus that either IT Cost Charge Back or Look Back is a critical discipline to effectively run a world-class organization. Certainly the addition of Chargeback in ITIL version 3 about 5 years ago pushed many off the fence. Now most organizations have a services catalog so they can articulate cost to the business, and for good reason. A good IT service catalog serves three functions: helps the business make good decisions; makes IT accountable; and allows predictable budgeting.
Changing the Game from Defense to Offense: A good, transparent service catalog that includes external benchmark data can change the posture from reactive (defense) to proactive (offense). Often far too much time is spent defending and justifying charges to the user community when doing the job right upfront can alleviate so many hours of justification. Granted, doing the job right is no simple task and requires a detailed understanding of cost and quality. However, the benefits will allow IT to effectively run IT as opposed to a never ending game of whack a mole justifying every expense to every department.
Never say Cost without Quality: It is important to remember that one can never discuss cost without quality. Low cost, low quality and high cost, high quality are two easy to maintain options. A good service catalog can also explain the additional components and costs needed to achieve high quality.
Benefits of Demand Management: In our benchmarking practice, we continually observe a direct coloration between low cost/high quality organizations and their ability to forecast demand accurately. This pertains to projects where poor forecasts can either leave budgeted money on the table, money that could have been used for other things, or cause budget shortfalls. It also pertains to hardware and software where emergency purchases can hike acquisition costs or conversely cause expensive over capacity situations. Additionally, it will completely eliminate the opportunity to time buys strategically to reap maximum discounts.
So the discussion continues November 1st in Denver with our IT Finance Managers at the Fourth Quarter ITFM Meeting. Members can register to attend by logging into The IMF website and visiting our Events page.