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IT chargeback management tips and turnoffs

In this guide, experts offer guidance on IT chargeback management, a process that some believe does more harm than good.

On the surface, IT chargeback management seems simple enough: allow users to see what IT services cost and bill business units directly for the services they use. This allows the business to see just what they are paying for -- and whether the services rendered justify those costs. Chargeback management also allows the business and IT to budget and control costs better, and hopefully justify IT investments. 

IT chargebacks can also lead to dissention among the business ranks when such transparency is introduced. What may seem a simple service, such as email, may result in sticker shock on the part of a user who doesn't understand the underlying costs of maintaining an application. 

Awareness of application maintenance costs could lead business units to look elsewhere -- to a cloud provider, say -- for a better price. In addition, public and private clouds introduce nuances to the IT chargeback management process -- for example, how individual business units should be charged under a pay-per-use model in a shared services environment. 

In this guide, experts debate whether IT chargebacks do more harm than good, how IT can approach this complex process, and the benefits and drawbacks of introducing this model.

  • IT chargebacks can harm the IT-business relationship
    [By Niel Nickolaisen, Contributor]
    One of the first steps to IT chargeback management is developing a precise process for linking costs to disparate IT services. CIO Niel Nickolaisen explains why he thinks this complex task may not be worth it, and how it may ultimately erode the customer-IT relationship.

  • How the chargeback process will alter the IT-business relationship
    [Laura Smith, Features Writer]
    Instead of promoting an us-versus-them mind-set, a chargeback process gets the IT department talking at the same wavelength as the business. As an internal independent software vendor, the IT organization's services can be thought of as products. It's part of the cultural transition. That cultural change extends to roles, with IT organizations hiring product managers to package IT services into measurable SKUs, and placing account executives with business units to go over the bills and discuss strategic deployments.

  • IT chargeback adoption obstacles and benefits
    [Laura Smith, Features Writer]
    IT chargeback management is complex, especially in a shared infrastructure with workloads running on virtual machines: That's why most IT departments haven't done it, experts say. Then there are mobile computing devices to account for. Smartphones, for one, are an uncontrollable cost in Schumacher Group CIO Douglas Menefee's experience: "If you say you need it, I'm not going to question that. I do ask, 'If you were paying for this yourself, would you consider it a valid expense and make the same investment?' Ninety-nine percent of the time, they say yes." But the real showstopper is that Menefee doesn't want Schumacher to be penny-wise, pound-foolish.

  • IT chargeback: A fundamental part of cloud computing takes share
    [Laura Smith, Features Writer]
    Like an electric meter that spins faster as more devices are plugged in, the IT chargeback model needs a layer of specificity to reflect that. In a virtual world where systems are combined, not only is the metering more difficult but the possibility of a system failure looms as well. Virtual servers frequently are oversubscribed, meaning that they probably would crash if all the clients on them required maximum compute power. So, what do you do when one application goes overboard? Experts suggest charging an overuse fee.

  • The IT chargeback system in a virtual data center
    [Brien M. Posey, Contributor]
    Every organization using an IT chargeback plan handles it differently, and the value of computing resources can vary radically from one organization to another. But things can really get thrown out of whack when an organization virtualizes its servers. After all, multiple departments may end up sharing server hardware, so how do you charge them for those resources fairly and objectively?

  • IT chargeback: A political hot potato is tossed up by cloud computing
    [Laura Smith, Features Writer]
    Some say IT chargeback is not only inevitable but mandatory for achieving true efficiency; others say it sets up a charged relationship in which business units naturally second-guess IT departments' pricing for services. With such public clouds as's Elastic Compute Cloud, or EC2, a credit-card click away, an IT staff risks losing an opportunity to guide IT strategy.

  • IT chargeback process: Not always a best practice
    [Laura Smith, Features Writer]
    If you don't have a clear vision for IT chargeback management, in other words, what you hope to accomplish, there's a good chance the effort will fail. Here experts share best practices for laying an IT chargeback model foundation, including developing an IT service catalog.

  • Does IT chargeback pave the way to outsourcing?
    [Linda Tucci, Senior News Writer]
    On price alone, the internal IT organization is almost guaranteed to be noncompetitive, especially when the IBMs and CSCs of the world typically underbid for the first couple years to get the business.

  • Pay up for IT services: How to create an IT chargeback model
    [Joan Indiana Rigdon, Contributor]
    Business managers are being asked to shell out for the IT they use. Here's why they find it painful -- and how you can create a billing model that best meets the business' needs.

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