The Utopian Hysteria of the IT Chargeback Model

By Christian Buckley posted 01-16-2013 19:39


It has been tried over and over again, and in most cases it has failed. Many IT organizations want to find a way to show a return on investment (ROI) for their IT and project management activities, often foraging into some version of a chargeback model without understanding the fieldwork done by other organizations. It makes sense that they would explore their options: most IT organizations find themselves constantly under pressure to reduce costs, to do more with the people they have, and to deliver against requirements and timelines that they often have little influence over. The chargeback model is a way of assigning value to IT projects, and while no real cash transaction happens between organizations in most cases, the goal is to help customer organizations better understand the costs associated with many of their requests.


The real wake-up call is when a team becomes fed up with the inability of their in-house team to deliver, and goes outside to find experts. Many quickly come to terms with the reality that their internal resources are performing tasks at a much less expensive rate than an outside team would charge. Without getting into the whole argument of build versus buy, and permanent versus temporary employees -- there are certainly scenarios where each of those make sense. The fact is, you can hire a consultant with the right skills and, presumably, ramp them up much more quickly than you could a team of internal IT resources, but what is often not considered are the lost opportunity cost when that project comes to an end, and the expertise walks out the door to their next client.


Again, I'm not making a judgment call here, just commenting on the fact that most organizations don't do their homework and understand all of the costs and implications of their business decisions before moving forward.


At the core of the issue, businesses want to show ROI. Some organizations build out complex cost models, mapping them to roles and responsibilities, and charging project work back to the business accordingly. But this model can be difficult to administer and maintain, and very few organizations are successful at doing it. If you find yourself struggling to manage the governance model surrounding your ECM platform, then you're probably not ready for the governance acumen required to sustain a chargeback model. To successfully manage it, you need to


  • Understand which organizations are using the chargeback model, and which are not.
  • Have roles clearly defined, and every IT resource (person) assigned to a role.
  • Have a fairly robust portfolio management platform that allows you to track discrete project activities, but more importantly, to adjust resource planning priorities on the fly, as needed.
  • Track individual progress, both self-service and through project management oversight.
  • Provide dashboard oversight per project, and for the overall portfolio of projects. Transparency into the projects is key, otherwise your internal customers will become frustrated by the lack of communication/reporting/visibility and hijack the system.
  • Establish a governance body with oversight of the chargeback model, and constantly loook for ways to automate, refine, and improve on what you've built.


Many organizations attempt to build out a chargeback model, but few have the IT process maturity to sustain the model. If you are exploring the concept, be realistic about your organizational strengths. Success requires some degree of governance across the various disciplines, including operations, support, project management, engineering, and overall service management.  

#processmanagement #servicemanagement #chargebackmodel #ProjectManagement #InformationGovernance