Using IT Chargeback to Reduce Costs and Empower Business Units

IT Chargeback was designed offset the lack of business unit accountability created by a centralized IT model. If effective, an IT Chargeback solution can achieve two goals. One, it can increase the satisfaction of end users and business unit heads with IT by empowering business units to make more educated IT resource decisions. Two, more educated business unit consumption frees up IT resources to accomplish more critical business objectives and to improve the company’s overall profitability through better use of IT resources.

In practice very few IT Chargeback implementations accomplish these goals. Why? Because unless the IT Chargeback system has the capabilities to tell users what their costs are, why their costs are what they are and how they can achieve the same goals with lesser costs, IT Chargeback is just an itemized bill of services and resources and does not provide a tool that can be used to improve performance.

CIOs know that high- level cost allocations are inaccurate, while detailed, accurate cost allocations can consume an extraordinary amount of already scarce resources. CIOs want to stick to the business of providing IT services.

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