Editor’s note: Karen McIsaac is the founder of Project Managers, Inc., which she launched in 1998.
CHARLOTTE, N.C. – Information Technology is a major service provider in every company and because of this nearly every IT organization faces issues with a lack of capacity. They can barely keep pace with the day-to-day requests and changes, much less with new initiatives driven from business areas that require IT services.
Because of the reliance on IT as a major component of daily business operations, people do not tend to think of it as a business within the business. Just like the services that utility companies provide, most people take IT for granted until there is a problem.
Similar to a utility company, IT should communicate the direct cost of a service to the customer. The IT chargeback is one of the fundamental cornerstones that fosters organizations’ maturation in how they prioritize and weigh their multitude of initiatives. Having a disciplined method of charging for what is being produced and delivered lends credibility to the IT service provider.
Companies are becoming more diligent in controlling spend, which has led many organizations to a formal IT chargeback method. The lack of such a control can result in the following scenario. The business areas (IT customers) receive an IT cost allocation based on utilization. The area with the largest allocation of IT budget receives the most attention, which is sometimes referred to as the “squeaky wheel.” This can lead to having no cost/benefit justification for the project or initiative as no one knows the anticipated costs. When IT costs are not directly tracked, there is no way to know if/when to kill a project and ultimately no one can be held accountable.
As companies begin implementing a specific chargeback methodology, IT should consider defining performance measurements, both internally and for their customers. These performance metrics should include how to measure, track and report using Service Level Agreements (SLAs) and Key Performance Indicators (KPIs).
Throughout the transition to paying for what you get, IT should communicate what is changing, as well as reasons for the change and progress being made. Communication supports employees understanding of the new culture and fosters adoption of it.
IT should provide clear expectations of service delivery and associated costs; this transition cornerstone begins the accountability process – for IT and the business customer. The value of the service becomes more tangible. The business customers’ incentive to seek outside resources for IT support will be reduced. There will be clear financial justifications for their business driven needs, and as IT begins to operate more and more like a business, enhanced credibility will be gained with senior leadership and the entire company.
Karen McIsaac, PMP, is an expert in organizing, planning and executing large program/project initiatives. She has over 20 years of experience in delivering large business-driven initiatives with significant business, cultural and technological impact. She can be reached at 704-332-6611 or firstname.lastname@example.org. Project Managers, Inc., founded in 1998, specializes in the implementation of business-driven initiatives that transform Fortune 1000 organizations. As implementation professionals, we deliver on time and within budget.