Chargeback

  • J-440512

    SSCertifiable

    Points: 6285

    -> Steve Jones

    Imagine you have an established product that produces profit for your company. You decide to launch a new product. The new product likely will suck out profits as it is being developed and launched, and those come from the existing product's department. At a department level if people were watching their "budgets", they might manage differently than someone in charge.

    Let's imagine that the product is short-life video game or a video graphics board. Refusing to allow money to continuously develop improved follow-up versions leads to the product quickly falling by the wayside. How long does the company survive ?

    Turf war: bean counters trying to split the beans in different piles. Does not matter if some beans drop off the table in the process.

  • mhaskins

    Ten Centuries

    Points: 1145

    J (2/25/2009)Turf war: bean counters trying to split the beans in different piles.

    That is exactly what I was talking about: shortsightedness and self-importance.

    At the end of the day, someone has to count the beans. But overanalyses can be detrimental.

    BTW my icon is my cat, Snaps. He'll be 11 yrs in April. I called him "Snaps" because he has a petting tolerance. However, he is much more patient than me 😉

    Mia

    I have come to the conclusion that the top man has one principle responsibility: to provide an atmosphere in which creative mavericks can do useful work.
    -- David M. Ogilvy

  • mhaskins

    Ten Centuries

    Points: 1145

    Steve Jones - Editor (2/25/2009)


    At a department level if people were watching their "budgets", they might manage differently than someone in charge.

    Information is power, and chargeback at a high level, a rough, 10,000ft view for upper management can be a powerful tool for directing the business. But it has to be there to help the business, not provide accountability for every slice of disk space or bandwidth.

    Believe me, everyone and their brother are watching their budgets. There is no need to worry about that.

    All you need is a good IT leader with a smidgen of business sense to maintain the balance. Trying to create a tool for a manager may be difficult in this position. Just hire a leader instead. Have all of the major requests go through her (or him) for scheduling. If there is a resource issue, they should be able to handle it.

    Mia

    I have come to the conclusion that the top man has one principle responsibility: to provide an atmosphere in which creative mavericks can do useful work.
    -- David M. Ogilvy

  • DPhillips-731960

    Hall of Fame

    Points: 3904

    The biggest issue I have seen with charge-backs is when a project and/or system is used by many departments, and the anguish that goes into "spitting the baby". Nobody wants to own it. The whole company needs it... for example:

    - core systems like domain, DHCP, and networking.

    - core data systems and reportable applications like customer data, product data, and employee-department relations.

    - back-end analytical processes like ETL to data warehousing projects.

    - etc.

    These have often engendered conversations that take far too long.

    In this day and age, nearly every job requires some sort of IT resources, and in fact much is legislated into law via SOX and other such wonders. Is it really worth every IT person's time to document every work effort to some cost center, and for the bean-counters to try to manage and manipulate that data?

    It seems to me to be far easier to budget directly for IT, and to just pay attention from the top levels on what is being developed and worked. Steering committees are still absolutely useful in this paradigm, and in fact helps as a communication front with inter/intra departmental needs and struggles for IT usage.

  • JJ B

    SSCarpal Tunnel

    Points: 4905

    Here's another idea for, "how do you allocate limited resources among departments?"

    How about letting IT decide? I make it my business to know our business. While I generally let management decide my "next big project", my day to day activity of small, medium and large projects and maintenance tasks is determined by me. I can make those decisions effectively because I know the business.

    There is only one me and everyone here knows that I have a list of tasks 5 years long. Resources are truly limited, but staff trust me to work on what needs to be worked on. I've built up that trust over the years, by showing good judgment. In our environment this approach works. Staff are generally happy, because I know how to get the best bang for my hour buck.

    I tried to think of a way and I do not think we could implement a charge-back scheme even if we wanted to. For the most part, we do not have pots of money and various budgets. Our division basically has one large giant budget that covers staff costs. Our staff have various program areas all of which would like my time, but they wait their turn and I know which programs need my time the most. I have the big picture and management and staff trust.

  • DPhillips-731960

    Hall of Fame

    Points: 3904

    JJ B (2/25/2009)


    Here's another idea for, "how do you allocate limited resources among departments?"

    How about letting IT decide? I make it my business to know our business. While I generally let management decide my "next big project", my day to day activity of small, medium and large projects and maintenance tasks is determined by me. I can make those decisions effectively because I know the business.

    There is only one me and everyone here knows that I have a list of tasks 5 years long. Resources are truly limited, but staff trust me to work on what needs to be worked on. I've built up that trust over the years, by showing good judgment. In our environment this approach works. Staff are generally happy, because I know how to get the best bang for my hour buck.

    (snipped most of last paragraph)... I have the big picture and management and staff trust.

    I agree completely. This kind of hands-off trust is hard (in some cases nearly impossible) to get established in large corporations. Not so hard in small and medium-sized businesses.

    IT must know the business needs of the business as good as or better than anyone else in the company... their success depends on it. More often than not, the IT departments that try to isolate themselves in a wall of "give me business requirements" without taking major initiatives to understand the ins and outs, will fail badly. Someone recently posted on this site (cannot remember which thread, but in last two weeks, and I am drastically condensing the idea here) that it is the job of the business to explain what they would like, but IT's job to make the proper desicions so as to keep the efforts from running out of scope and in the wrong direction.

    For an extreme example of this communication, we recently received a request for a "small" application to manage a small business service over the web. This business owner spec'd out 3 web-based screens: one for orders, one for delivery groups to get their daily tasking, and one for invoicing. To him this bit would suit the enterprise, on about 10 tables of data. We spent about 30 minutes asking several questions about his business and what reporting he wanted back out of this application. The conversation included statements like, "If you want delivery groups to get tasking, then you must be able to enter/manage groups at the least, and invoicing would imply you are tracking customers..." etc. We helped bring this owner to the understanding that if we'd stuck to his specs, he would be leaving out the ability to enter/edit employees, teams, delivery trucks, products (and inventory), security, clients, contractors (which are involved in this enterprise), scheduling, and etc. This owner was thinking a few all-in-wonder screens would equate to less dev time and cost. We explained to him that dev time was identical regardless of whether he packed the functionality into a few or task-isolated screens, and that the maintenance and changes to a wonder-packed few would be far more complex (especially when only certain people were allowed to see certain things). This type of ownership of the success of a project is definitely required before we could even to begin to give him a quote on time or dollars.

    In most cases, the "business owner" is not this far away from reality, but often does not consider other implications such as:

    - Inter/Intra-departmental use of the same data, and centralizing those sources.

    - Analytical processes for reporting.

    - Other data that is required to meet the needs of the reports desired, that may or may not exist yet.

    - Etc.

    In another example at yet another client, they had three departments that each had their own copy of the client list served by the company, and none were identical for the codes used for each, nor (obviously) PKs. Only IT would be able to steer that to a single source, and force all systems to ETL or read from a central source for updates. Deciding which method to use (ETL or mod existing apps to new source) is also only an IT decision.

  • JJ B

    SSCarpal Tunnel

    Points: 4905

    dphillips: Thanks for the reply. Your examples are great.

    I find that staff (my customers) can vaguely define some functionality that they want, but they just do not know enough to be able to fully articulate and conceive of all that they really need. That's my job. And the more that I know our business, the better I am able to fill the job.

  • sjsubscribe

    SSCrazy

    Points: 2080

    On the whole any kind of charge back system is detrimental to the organization in general and IT in particular. It will not work as a sustained activity. It may temporarily stop unusual demand for IT resources, but ultimately, as was pointed out, departments figure out ways to get around. The same thing happened in local governments across the country when the IT started charging line departments (sewer, water, police, buildings inspection, etc.) for "use" of IT resources. Many communities even setup their IT as a utility service and forced departments to "buy" from the utility just to sustain fixed costs. Departments reluctantly went along, but when time came for major investments in IT improvements, every line department backed out. Many of the IT type utilities ultimately folded as they could not compete with outside consultants, outside hosting services, and so on. None were more happier than the line departments. Many even showed "savings" in their budgets. IT with charge back setup was also prime for "privatizing" and "incentivizing" in the minds of city councils. In the private sector, it plays out as how they can remove IT as a cost center.

    If IT is justified as adding value, then measuring that value becomes a necessity. That's why some IT departments do nothing but hire lots of accountants just to maintain charge back systems. But if IT is justified as an essential ingredient, much like money, human resources, office space, and other things that go into keeping an organization alive, then IT can stay away from needless distractions like monitoring who's using what and how much.

    In my experience I found IT staff should stay away from charge backs and encourage demand as that makes IT more indispensable, and stay relevant. In fact, that's the only sure way to raise demand for more IT from other departments.

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