Implementing chargeback allows IT departments to clearly tie customer demands to IT resources, which in turn allows you to:
- Minimize financial risk and confidently manage your IT budget
- Build a smart and effective IT service catalog/marketplace
- Provide private and public cloud cost transparency
- Enable shared accountability between IT and its customers
However, to get the most out of your chargeback model, you must pay attention to usage patterns. Usage patterns are one of the most overlooked components of a successful chargeback model, yet they are the key to understanding customer demands, and building IT solutions that solve the right problems.
When you ignore usage patterns, you waste money and resources solving problems that never needed solving.
Two bike-share start-ups were recently rolled out to try to tackle the City of Seattle’s gridlock problem. While looking at their plans, I couldn’t help think about the perils of delivering a service to a customer.
Whether you are a bike-sharing service for Seattle cyclists, or an IT service owner responsible for enterprise architecture, your service portfolio must serve the needs of the business, and be agile in responding to changes in demand.
Consider this: A few years ago Seattle’s City Council approved funding for a bike share program called Pronto. The bikes had an obnoxious color to prevent theft (news flash: it didn’t) and could be picked up and dropped off at designated stops. After a couple of years, and limited uptake, the council pulled the funding. The program failed to tie customer-demand to its solution.
I wanted to like Pronto, but couldn’t. It required riders to pick-up and return the bikes at designated racks, and most of the designated stops were downtown—limiting my mobility to a small, high-trafficked area that even the most fearless cyclist thinks twice about riding in. The logistics of picking up and dropping off the bikes were cumbersome, and out of step with today’s ‘everything-now’ consumer culture. Pronto provided a service, but not the one I wanted.
Prove out IT service libraries by use
In IT, we see this scenario playing out over and over again, but instead of a poorly planned bike-share program, it’s a disconnected IT service marketplace. When the IT service you are offering isn’t wanted by the customer (‘actually, no, I don’t want to ride my bike downtown’), there isn’t much value.
Service owners need to advocate for a portfolio that the business actually uses. Some level of infrastructure services (IS) are needed for every organization with an IT spend. But a widely distributed workforce has different IS needs than on-site headquarters. Organizations waste time when they build an all-inclusive service marketplace, including offerings not used by the business.
This is where chargeback usage patterns come in. At initial roll-out of your chargeback process, you take a first pass at your service marketplace. Over time, your ‘bill of IT’ returns usage patterns, which service owners can use to rationalize the library of services and focus investments in the most widely adopted areas.
With the bill of IT, you can quickly see what technology is being used, who is using it, and even where it’s being used. That puts the levers that control IT costs closer to the business.Jan-Willem Ligthart, Cargill, IT Finance
Now, back to that traffic congestion. After Pronto failed, two more companies tried to resurrect a bike-sharing service in Seattle (Spin and Limebike). These companies took a different approach.
While the garish bike color convention remained, they ditched the idea of designated pick-up/drop-off spots. The bikes have GPS locators that announce their presence to you via a phone app. With one scan of your phone, the bike unlocks, and when you are done, another scan locks it back. You leave the bike on the sidewalk, directly in front of your destination.
Almost immediately, a sea of fluorescent orange (Spin) and green (Limebike) bicycles popped up at intersections across the city.
Unlike with Pronto, customers build the solution they wanted, and success followed.
Service portfolios change over time.
Organizations gnash teeth over the right and wrong way to offer up IT service choices, but the reality is you don’t know all the answers when you first roll out service-oriented IT.
If a service owner takes a Spin/Limebike-approach to its service marketplace, the portfolio will be flexible enough to incorporate changes. Over time, service owners let usage patterns define their offerings.
If tier four storage isn’t being used, discontinue it; if tier two demand outstrips supply, build more capacity (and throttle demand with pricing in the interim).
Service owners manage IT offerings with two control mechanisms. Either remove services that aren’t being used or add more capacity to the most popular services. The chargeback process is then underpinned by services that are relevant to support customer demand, but lean enough to control resource sprawl and redundancy.
Read the case study Demystifying IT Elevates Cargill Team to Leadership Role to see how Cargill brought all of its IT spend into global IT and created a service-oriented bill of IT that has shifted the conversation with the business from cost to value.