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ITIL :: View topic - Charging Back for Services?
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Charging Back for Services?

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Joined: Feb 01, 2007
Posts: 1

PostPosted: Fri Feb 02, 2007 5:59 am    Post subject: Charging Back for Services? Reply with quote

I'm new to this forum, so hope somebody can provide some feedback.

We're looking at our chargeback model. For years it was based on a support ratio; i.e. x number of IT to x number of clients. I've been saying for years that it's not an accurate system. It basically says that any "saves" are directly related to headcount, which in a process improvement environment is not always the case.

After a long time, we finally have an opportunity to make a case to management. So I was wondering if anyone might have some feedback on how their organizations did chargebacks, or suggestions we might consider.


Mike Hanson
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Joined: Oct 11, 2006
Posts: 21

PostPosted: Wed Feb 14, 2007 4:44 pm    Post subject: Reply with quote

Hi Mike,
Charge back is done on apportioning the cost of service (plus any margin that you want to show IT as a profit center). To calculate cost of service you have to identify the accurate number of users for that service.
There are different ways to deal with this.
1. Cost per call
2. Cost per service availed. Which means each item in the service catalogu has to be assigned a value
3. Analysing the service desk data and find out from where the calls originate
4. Cost of change and release
5. Cost of Availability and continuity

All of the above will work only if you have a robust ITIL system and the management will.

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Joined: Jan 20, 2006
Posts: 172
Location: England

PostPosted: Sat Feb 17, 2007 10:16 am    Post subject: Reply with quote

The itSMF recently ran a IT Financial Management day, the presentations for which are freely available (click here) on their website. Some of them may give you some ideas.
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Joined: Feb 20, 2007
Posts: 14

PostPosted: Tue Feb 20, 2007 6:36 pm    Post subject: Reply with quote

Hardest thing, allocating costs. We typically measure costs by technology layer, but we ideally want to report/allocate/charge them by service, which is "at right angles" to the technology layers, i.e. it cuts across them.

Just as examples of the sticky issues raised:

How does the cost of a SAN get apportioned to the services running far above it?

Why should users be charged per incident or call? This only discourages them from calling, which is not what they want. And incidents are not always their fault (despite how it seems sometimes Twisted Evil)

No matter what apportionment mechanisms you come up with, they will be to some extent arbirary, or - if you prefer - imperfect. therefore they will unavoidably
1) be unfair and therefore risk losing support of the business paying them
2) distort behaviour
All you can hope is to come up with apportionment metrics that minimise these two side effects, so please do bear them in mind when designing cost allocation.
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