The IT Agenda: Move Beyond the Free Lunch

To put that situation in managerial accounting terms, the fixed cost of storage was miniscule compared with the variable cost of labor necessary to provide that storage. So we let users believe that getting more storage would be expensive and inconvenient for them, and somehow they managed to find other places to dump their junk.

But deception probably isn't the best basis on which to run a business. There's a better way to ease the pain all around: chargebacks.

Ah, Those Dreaded Chargebacks

Sure, chargebacks can be torture. How do you determine precisely what things cost so you can charge users accurately for your services? And how can you assure users that your prices are reasonable when you don't want to raise the prospect of outsourcing to vendor competitors?

Chargebacks are the only way to distribute costs fairly throughout an enterprise. And they can pay off big time once you implement a well-thought-out system and work through the lingering kinks.SANs (storage-area networks) are a perfect example of a technology that demands structured chargebacks. They're a shared resource that, if not meted out carefully, can be hogged by a single department at the expense of all the organization's other departments.

A sys admin told me recently about a software vendor that, upon realizing that a client's server was connected to a SAN, started requesting extra space constantly for the department that had hired him.

It turned out the employees in that department didn't want to take the time to clean out their files, and the vendor didn't want to do database maintenance. So wham!--80 GB, 90 GB, 100 GB of costly storage space was allocated for temp files and database backups, and the IT department was left holding the bag.

Of course, chargebacks aren't appropriate for all technologies; you have to determine case by case whether they make sense. Remote access, for instance, might seem to lend itself to a chargeback system. Let the departments with the largest number of remote users pay their fair share, and let everyone else off the hook. But is it really worth doing all that tracking just so you can charge back for the use of switch ports? There it may be time for professional help.

They Don't Teach This In Computer ScienceYou don't necessarily need to hire a consultant or a CPA to set up an effective chargeback system. A conversation with your company's controller or your division's business manager might suffice. Ask about activity-based costing and internal transfer charges, and solicit tips to avoid the Achilles' heel of chargeback systems: a tracking setup so complex that it breaks the bank.

More important, bitch and moan (but in a good way). The more specifics you can share about the amount of time and money your department devotes to supporting users, the better a chargeback system the business team can help you create.

Got chargeback pain you want to share? Drop me a line at [email protected].