New Approach to IT Charge-back Faster and Easier ABC

IT Charge-back systems have been roundly criticized for their cost inequities, causing IT users to challenge those systems and promoting distrust of the IT departments. While traditional ABC can provide a more accurate picture of the costs associated with IT consumption, the historical problems associated with ABC implementations, including the time, effort and labor resources required to sustain it, has made ABC impractical for most companies. Now, however, there's an easier, faster and less expensive way to utilize ABC to get at the truth behind IT user consumption-a methodology called Time-Driven Costing.

The problem with IT Charge-back these days, everyone is looking for a better way to manage costs. Nowhere is that more true than within IT. Gartner Inc. has estimated that IT investments, already the largest percentage of an enterprise's capital expense, are projected to grow from 30 percent in 2000 to 50 percent by 2010. The challenge is clear: how can CIOs run their operations more like a business and stop IT costs from spiraling out of control? The answer, historically, has been to charge business units for the amount of IT services they use, through IT Charge-backs. Yet in practice, the success of this methodology has been mixed at best. Why?

[ read more ]