- Business units voraciously consume IT services and don’t understand the actual costs of IT. This is due to lack of IT cost transparency and business stakeholder accountability for consumption of IT services.
- Business units perceive IT costs as uncompetitive, resulting in shadow IT and a negative perception of IT.
- Business executives have decided to implement an IT chargeback program and IT must ensure the program succeeds.
Our Advice
Critical Insight
Price IT services so that business consumers find them meaningful, measurable, and manageable:
- The business must understand what they are being charged for. If they can’t understand the value, you’ve chosen the wrong basis for charge.
- Business units must be able to control and track their consumption levels, or they will feel powerless to control costs and you’ll never attain real buy-in.
Impact and Result
- Explain IT costs in ways that matter to the business. Instead of focusing on what IT pays for, discuss the value that IT brings to the business by defining IT services and how they serve business users.
- Develop a chargeback model that brings transparency to the flow of IT costs through to business value. Demonstrate how a good chargeback model can bring about fair “pay-for-value” and “pay-for-what-you-use” pricing.
- Communicate IT chargeback openly and manage change effectively. Business owners will want to know how their profit and loss statements will be affected by the new pricing model.
Implement an IT Chargeback System Research & Tools
Start here – read the Executive Brief
Read our concise Executive Brief to find out why you should implement an IT chargeback program, review Info-Tech’s methodology, and understand the four ways we can support you in completing this project.Besides the small introduction, subscribers and consulting clients within this management domain have access to:
- Implement an IT Chargeback System – Phases 1-4
1. Launch
Make the case for IT chargeback, then assess the financial maturity of the organization and identify a pathway to success. Create a chargeback governance model.
- Implement IT Chargeback – Phase 1: Launch
- IT Chargeback Kick-Off Presentation
2. Define
Develop a chargeback model, including identifying user-facing IT services, allocating IT costs to services, and setting up the chargeback program.
- Implement IT Chargeback – Phase 2: Define
- IT Chargeback Program Development & Management Tool
3. Implement
Communicate the rollout of the IT chargeback model and establish a process for recovering IT services costs from business units.
- Implement IT Chargeback – Phase 3: Implement
- IT Chargeback Communication Plan
- IT Chargeback Rollout Presentation
- IT Chargeback Financial Presentation
4. Revise
Gather and analyze feedback from business owners, making necessary modifications to the chargeback model and communicating the implications.
- Implement IT Chargeback – Phase 4: Revise
- IT Chargeback Change Communication Template
Workshop: Implement an IT Chargeback System
Workshops offer an easy way to accelerate your project. If you are unable to do the project yourself, and a Guided Implementation isn't enough, we offer low-cost delivery of our project workshops. We take you through every phase of your project and ensure that you have a roadmap in place to complete your project successfully.
1 Kick-Off IT Chargeback
The Purpose
Make the case for IT chargeback.
Identify the current and target state of chargeback maturity.
Establish a chargeback governance model.
Key Benefits Achieved
Investigated the benefits and challenges of implementing IT chargeback.
Understanding of the reasons why traditional chargeback approaches fail.
Identified the specific pathway to chargeback success.
Activities
1.1 Investigate the benefits and challenges of implementing IT chargeback
1.2 Educate business owners and executives on IT chargeback
1.3 Identify the current and target state of chargeback maturity
1.4 Establish chargeback governance
Outputs
Defined IT chargeback mandate
IT chargeback kick-off presentation
Chargeback maturity assessment
IT chargeback governance model
2 Develop the Chargeback Model
The Purpose
Develop a chargeback model.
Identify the customers and user-facing services.
Allocate IT costs.
Determine chargeable service units.
Key Benefits Achieved
Identified IT customers.
Identified user-facing services and generated descriptions for them.
Allocated IT costs to IT services.
Identified meaningful, measurable, and manageable chargeback service units.
Activities
2.1 Identify user-facing services and generate descriptions
2.2 Allocate costs to user-facing services
2.3 Determine chargeable service units and pricing
2.4 Track consumption
2.5 Determine service charges
Outputs
High-level service catalog
Chargeback model
3 Communicate IT Chargeback
The Purpose
Communicate the implementation of IT chargeback.
Establish a process for recovering the costs of IT services from business units.
Share the financial results of the charge cycle with business owners.
Key Benefits Achieved
Managed the transition to charging and recovering the costs of IT services from business units.
Communicated the implementation of IT chargeback and shared the financial results with business owners.
Activities
3.1 Create a communication plan
3.2 Deliver a chargeback rollout presentation
3.3 Establish a process for recovering IT costs from business units
3.4 Share the financial results from the charge cycle with business owners
Outputs
IT chargeback communication plan
IT chargeback rollout presentation
IT service cost recovery process
IT chargeback financial presentation
4 Review the Chargeback Model
The Purpose
Gather and analyze feedback from business owners on the chargeback model.
Make necessary modifications to the chargeback model and communicate implications.
Key Benefits Achieved
Gathered business stakeholder feedback on the chargeback model.
Made necessary modifications to the chargeback model to increase satisfaction and accuracy.
Managed changes by communicating the implications to business owners in a structured manner.
Activities
4.1 Address stakeholder pain points and highly disputed costs
4.2 Update the chargeback model
4.3 Communicate the chargeback model changes and implications to business units
Outputs
Revised chargeback model with business feedback, change log, and modifications
Chargeback change communication