Article

Supporting a Fair and Practical IT Chargeback System

Aligning IT & Business
Posted:
February 4, 2013

IT operations organizations should view chargeback as a means of improving the IT organization/ business partnership, rather than as a simple accounting exercise.

Source: “Server Virtualization Forces Rise in Chargeback Interest,” Gartner Inc.

Goal: Support IT Chargeback

IT chargeback policies allow IT organizations to charge business units for the IT resources they use, shifting the burden of IT budget justification to the consumers of the resources. IT is viewed less as a cost center supplying support infrastructure, and more of a partner from which business units request resources and gain business value. Expenditures are driven by business units, who often become more disciplined with IT requests and consider IT costs when evaluating business initiatives. The true value of an IT chargeback system is in decision support, not just cost recovery, and focuses on services, not infrastructure.

  • Do you have a chargeback policy today?
  • What method do you use to allocate costs back to business units? Is it fair and practical?
  • What impact does chargeback have on your IT budget?
  • What is the cost of your chargeback program?
  • Are IT costs a consideration when evaluating business initiatives?
  • Do you need to bill an ASP or outsourcer?

Challenges

  • Establishing a fair and practical chargeback policy
  • Partnering with business units for buy-in
  • Collecting usage metrics
  • Allocating IT costs efficiently
  • Pricing IT services
  • Providing detailed billing reports
  • Understanding the cost of an IT chargeback system
  • Recovering IT expenses based on business services

Rethinking the Problem

Vityl Capacity Management collects and manages usage data that is provided as input to chargeback billing systems. Organizations can leverage data they already collect for performance- and capacity-related activities by simply assigning charge codes for each business unit.

  • Establishing a fair and practical chargeback policy
  • Partnering with business units for buy-in
  • Collecting usage metrics
  • Allocating IT costs efficiently
  • Pricing IT services
  • Providing detailed billing reports
  • Understanding the cost of an IT chargeback system
  • Recovering IT expenses based on business services

Considerations

What if, when charging IT costs back to the business units, you could automatically generate and distribute accurate usage reports to users?

What if you could improve the accuracy and timeliness of your chargeback system?

What if you could improve efficiency by leveraging usage data you already collect for performance and capacity-related activities?

What if you could obtain political buy-in to your chargeback process by providing detailed usage reports to business units?

How Vityl Capacity Management Can Help You Support IT Chargeback

Support efficient IT chargeback processes

Improve the accuracy and timeliness of the chargeback process with usage reports that are tailored to the needs of various departments and levels of management.

Automatically generate and distribute usage reports to users

Collect and centralize chargeback data for easy online access and automatic report distribution to business unit managers.

Provide accurate usage metrics to billing applications

Provide summarized or detailed chargeback metrics to billing systems for each business unit on all processes and resources consumed.

Select from two billing methods

Provide data to allocate costs by charging for actual resource usage or by charging a flat rate for base usage with additional fees for excess usage.

Assign billing codes for cost allocation

Simplify IT cost allocation by assigning billing or charge codes to business processes, applications, zones and guests.

In fact:

DB Systel GmbH, the IT service provider for Deutsche Bahn uses TeamQuest software to provide usage metrics for their chargeback system. Costs are transparent and automatically distributed across business units in a fair and practical manner. Invoices are tailored to various needs and display usage data on a per day and per month basis, aiding in buy-in and support across the organization. The accuracy and quality of usage metrics, the low impact on the system, and the flexibility of the tool are prime reasons for the successful implementation of their IT chargeback system, from both political and operational standpoints. DB Systel GmbH today leverages the same TeamQuest software not only for IT chargeback, but also for performance analysis, Capacity Management, surveillance & systems management, and customer support.

Get started with a capacity management practice

Learn how Vityl Capacity Management can help you get started.