ShmargeBack–Get IT!

Charge-back, Show-Back, Shmargeback, call it what you will but get off your duff and do it.  As I travel around and work with customers on building out their Private/Hybrid cloud strategies I’m amazed at how few organizations actually have a clue about what it costs to deliver IT services.  Sure, the CFO could look at his budget and say, “Mmmm, yup you guys cost me X.”  Ok, but what are you actually delivering for X??

Can you clearly articulate, “I deliver this, this, and that at these service levels that backstop and deliver this revenue for the business”?

Increasingly IT is being questioned:  “What do you actually provide me?” and “Is there another way I could do it more efficiently (cheaper in CFO speak)?”  VMware’s Paul Maritz like to point out that for the first time in IT’s recent history, corporate IT now has an external (competitive) rate card against what their services can be compared.   It’s easy today for a Line of Business to go to Amazon, Rackspace, you-name-it, and simply procure IT services.  Sure, it’s fraught with issues  and considerations (that the business user won’t consider) but at the end of the day, it’s cheap, easy and moves at their pace — NOW!

I firmly believe corporate IT still can provide HUGE value to the business, but to maintain relevance it needs to dramatically change.  You MUST be able to articulate what it costs to deliver a given service.  You MUST be able to differentiate your services and the value you provide to the business in terms they understand and care about.  The fundamental basis for doing so is measurement.  So what should you do?

  • Examine yourselves.
  • Procure the tools needed to start metering your services.
  • Deploy those tools
    • It’s amusing how often people buy capabilities yet never deploy them….usually because they are too busy or lack the skills in-house.
  • Differentiate your services, for example:
    • Compute and Storage Performance tiers
    • RTO/RPO tiers
  • Start providing your LOB’s  with metrics of what they are actually consuming and the associated costs for those services (showback, baby!)
    • If you don’t do Chargeback today this will start to condition the business to see your services defined in these terms, all-the-while setting the stage for moving to a chargeback model.
    • This will also give you an internal scorecard by which you can measure yourself against those external providers.  Believe me, if you are not already, your internal customers are.
  • For new services/requests, begin engaging in meaningful business-based conversations about what is actually needed for a given service.  Show the consumer the costs associated with the various tiers of service (“NO, DR isn’t free”, it costs $20/month/VM”, for example).

At the end of the day it’s economics.  When we as IT service providers can define various levels of service at graduating degrees of cost, the business will decide what they are willing to pay for based upon their requirements.  Furthermore, you will be able to truly measure yourself against external providers and clearly articulate your value-add.

Without it, your days are numbered.

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