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The Right Way To Do Chargeback

Do you need a better handle on your technology costs? Or do you want to better understand how technology products and services are consumed by internal business units in order to ensure they’re providing the most cost-effective and value-added services?  Better yet, do you want to transfer the accountability to those who are actually using those IT products and services?

If so, let’s talk of how to define Showback and Chargeback.

An effective Showback process enables you to obtain an accurate snapshot of the technology investments used by each department within your organization. Showback also empowers IT and its customers to not only track spending and consumption, but also to analyze how that technology is used both effectively and efficiently by business units, users and employees. As you can imagine, this information is invaluable. You’ll now be able to know whether or not IT products and services investments are advancing your strategic business goals.

Not every IT Financial Management or Technology Business Management provider views or defines Chargeback the same way though. Transferring the accountability can mean transferring the budget dollars, which requires an accounting acumen, rigor and precise process. Some technology business management vendors casually define the Chargeback process as simply the ability to send a file of allocations to one’s General Ledger system – and then HOPE it balances with the Showback reporting. Two questions additional questions should always be asked in order to gauge future success:

  1. At what level are these allocations?
  2. Does the input to the General Ledger match what’s in the reports pushed out to the departments?

These two questions are important because first, if the allocations are only high-level to the business areas and fail to attribute those allocations with a much-needed line item detail, this is a potentially disastrous attempt to Chargeback.  Showback reporting may then not equate to what customers are actually charged as well. Second, although it really goes without saying, data accuracy is a huge an issue. Imagine the frustration if the numbers from your ITFM application fail to match what’s in the General Ledger. Some ITFM vendors claim they do Chargeback in the right way when in reality you’ll be left with unfulfilled expectations – and reports that don’t match your General Ledger. When the data is not accurate, both you and the data will lose credibility, which is worse than providing the information in the first place. Finally, business units will be far from pleased if your ITFM inaccuracies negatively impact their bottom line.

There’s a better way though. With Upland’s ITFM application, ComSci, you’ll receive a fully hosted production chargeback system with accurate fact-driven transactional consumption information. You’ll have the ability to provide internal customers with insight regarding IT charges without wasting valuable time gathering that information. You can spend your time focusing on strategic, value-added activities instead. Don’t just take our word for it though. One of our current customers, Denise Vay of PPG Industries, boasted about ComSci’s Chargeback capabilities in a recent case study, “The accuracy of our data is now much greater, primarily because of the enhanced visibility provided within the ComSci solution. This allows each department to analyze its utilization of services and track its internal budget. Better visibility also enables managers to control demand, which has resulted in reduced overall spend.”

Give us a call anytime to learn more about the right way to do Chargeback.

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