IT Chargeback

With IT budgets being carefully scrutinized, IT chargeback is an alluring notion. But many IT organizations struggle with how to implement an IT chargeback system that is fair and practical.

The idea is to charge business units for the IT resources they use, shifting the burden of IT budget justification to the consumers of the resources and making IT less of a cost center. Expenditures are driven by the business units, who suddenly become much more cost-conscious, and decisions are based on a truer cost of obtaining new business. Therein lies the real value of an IT chargeback system - allowing people to make better business decisions by including IT costs in the mix.

For many data centers undergoing server consolidation, IT chargeback gets more complicated than the one application per server policy. But without consolidation, servers are often underutilized, wasting significant resources.

TeamQuest Software Addresses IT Chargeback

To enable correct charging, it is necessary to have adequate measurements of resource consumption. The kind of measurement to use depends on the type of resource in focus. CPU utilization is most likely the best measurement for an application server, whereas chargeback for a file server probably should be based on the relative amount of disk space occupied. If you include a database server, you might need a combination of the two. A cost model and charging policy needs to be designed individually for each organization.

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Practicing IT chargeback based on resource utilization calls for some sort of grouping of server activities into logical entities. The powerful workload mechanism of TeamQuest software will do just this. Workloads can be defined to capture activities pertaining to specific customers, departments, applications or any other logical grouping that is useful. This capability becomes even more central when several different workloads are hosted on the same physical server as a result of server consolidation. In addition to sending a formal invoice to customers on a regular basis, you can use TeamQuest IT Service Reporter to create dashboard-style reports customized for different customers using a drag-and-drop interface. You can tailor reports to show how much of each server resource is being consumed by each IT service, business process, department, or application. Making this kind of information available to the business units enables them to monitor past and present resource utilization themselves. This will hopefully yield higher acceptance of the charges, as well as a better understanding of how resource utilization may vary over time. The latter information could be used to improve the scheduling of resource-intensive activities to avoid peak situations.

Implementing a chargeback system? Contact TeamQuest