If the notion of chargeback to your business units for IT allocations makes you shudder, it’s probably because your experience with it was a bit ahead of its time. Many early attempts at ‘chargeback’ were ‘homegrown’ and failed because the right technology wasn’t available to aggregate, consolidate, and deliver accurate insight into IT expenses. In some cases, charges were based on a flat rate, such as a business unit’s percentage of revenue, rather than actual usage, putting a bad taste in a business leader’s mouth – particularly those that got the short shrift. Just ten years ago, most all IT utilization and consumption data was stored in ‘silos,’ carefully tended and managed for IT management, making it near impossible to accurately understand who was using what technology and integrate information from disparate systems.
There was also the problem of connecting disparate systems, which required integrations and APIs that were difficult to deploy and faulty at best. Hence the practice of allocations based on headcount for any and all IT expenses. ‘Chargeback’ was heralded as the best practice process that could change ‘peanut-butter spread’ allocations. The trouble was IT teams had to build the ‘chargeback’ system themselves.
Advancements in technology, including greater processor speeds, storage capacity at really inexpensive prices and the ability to have all the connectors to aggregate all of the information needed on consumption and utilization data have paved the way for a better chargeback process. Rather than a concept preceded by a litany of four letter words, today’s chargeback solutions are a different four-letter word: gift.
A SaaS-based technology financial management solution is the gift that keeps on giving because it provides organizations with a centralized line of sight into their own consumption, and both macro and micro level details of actual consumption, as well as total costs of all technologies deployed across the enterprise. This supports an accurate chargeback process that helps users understand the full cost of technology solutions and the value they deliver.
Chargeback done right offers business benefits to both the IT organization and corporate technology users. Because it provides a great degree of accuracy and a centralized line of sight, chargeback today supports more-informed analysis and decision-making. A significant additional benefit is that the entire IT budget, from both the IT team ‘supplier’ side and the business unit ‘consumer’ side of the IT value chain, can be agile and automated.-
Chargeback is also essential as more organizations opt for cloud computing solutions. Third-party solution providers excel at articulating their costs, making it necessary for internal IT organizations to communicate to their corporate business colleagues in the same manner. An IT technology financial management solution and effective chargeback model give organizations the agility and insight to weigh the value of technology resources and savings from cloud alternatives with information that supports keeping critical systems in-house. There is even the third choice that can be evaluated, and that is selecting to go with a hybrid technology solution.
An effective chargeback process gives the gift of corporate technology cost transparency, which is no longer a luxury, but a business necessity. With greater emphasis on the relationship between technology and business success, a chargeback solution can contribute to openness around costs with the IT organization. As a result, it encourages more responsible technology consumption and communication around business priorities from a financial viewpoint.
In an economy rife with uncertainty, organizations need to be nimble and adjust costs as business conditions change. Chargeback enables organizations to make the connection between the costs and value of IT products and services.
There’s no doubt that chargeback has evolved from a four-letter word to a mission-critical tool. With an effective technology chargeback system in place, organizations have the flexibility to meet the needs of the business, deliver optimal technology solutions and achieve the corporate business goals.