In part 11 of “Memoirs of an Enterprise Architect” I discussed the importance of having a robust Governance process in order to be successful with Enterprise Architecture. This week I will talk about the IT Chargeback Model.
What is IT Chargeback?
It is a funding model where IT can charge its internal customers for using IT technologies and services. Below is a list of key benefits gained when you implement an IT Chargeback model in your organization:
- Ensures that good business decisions are being made.
- Everyone has “skin in the game” in ensuring chargeback is executed efficiently and transparently.
- Full cost transparency through continuous communication across IT, finance and the individual business units.
- The business can compare the cost of their ask to IT with outside consulting organizations.
Let me provide a little background to help illustrate this further and explain why it is so important in today’s market. The primary driver at my previous organization for implementing a chargeback model was to treat IT as another business unit with its own profit and loss statement (P&L). This is partly known as IT-As-A-Service (ITAAS). The reason this is so important, especially now, is because IT is not valued and is seen as slow and expensive. This has resulted in businesses bypassing IT altogether and going outside of the organization to have their needs met faster and cheaper. So as you can see, through IT chargeback and cost transparency, the business has insight into what IT has to offer and the cost to meet the demands of the business.
Is your organization using a classic corporate funding model or has it embraced the IT chargeback model?
Enterprise Architecture is what enables the IT chargeback model and Cost Transparency. At the lowest common denominator, finance, HR, and contracts are just more data sources with which to pull data from into Troux. There is also a product called Apptio developed specifically to provide analytics around Total Cost of Ownership (TCO) and Cost Transparency after pulling in data from those same sources. If you are using Apptio in your organization then great, it can become the single source for chargeback and cost transparency into Troux. Either way, the point is, Troux is all about answering key business questions to enable your leaders to make better decisions, faster and with less risk to the business.
Do you want to provide more flexibility for IT to enable your business to respond faster to new opportunities and market shifts?
Please join me in the conversation about your thoughts on the IT Chargeback Model and what it means to have Cost Transparency in your organization.
See you next week, same time, same place where I will discuss Database Rationalization.