Control over the IT process of Identify and Allocate Costs that satisfies the business requirement for IT of
- ensuring transparency and understanding of IT costs and improving cost-efficiency through well informed use of IT services
- complete and accurate capture of IT costs, a fair system of allocation agreed upon by business users, and a system for timely reporting of IT use and costs allocated.
- Aligning charges to the quality and quantity of services provided
- Building and agreeing on a complete cost model
- Implementing charges as per the agreed-upon policy
- Percent of IT service bills accepted/paid by business management
- Percent of variance amongst budgets, forecasts and actual costs
- Percent of overall IT costs that are allocated according to the agreed-upon cost models
1 Non-existent
2 Initial/Ad Hoc
3 Repeatable but Intuitive
4 Defined
5 Managed and Measurable
6 Optimized
Benchmarks/Guidelines for Scoring
1 Non-existent when
There is a complete lack of any recognizable process for identifying and allocating costs with respect to information services provided. The organization does not even recognize that there is an issue to be addressed with respect to cost accounting, and there is no communication about the issue.
2 Initial/Ad Hoc when
There is a general understanding of the overall costs for information services, but there is no breakdown of costs per user, customer, department, groups of users, service functions, projects or deliverables. There is virtually no cost monitoring, with only aggregate cost reporting to management. IT costs are allocated as an operational overhead. Business is provided with no information on the cost or benefits of service provision.
3 Repeatable but Intuitive when
There is overall awareness of the need to identify and allocate costs. Cost allocation is based on informal or rudimentary cost assumptions, e.g., hardware costs, and there is virtually no linking to value drivers. Cost allocation processes are repeatable. There is no formal training or communication on standard cost identification and allocation procedures. Responsibility for the collection or allocation of costs is not assigned.
4 Defined when
There is a defined and documented information services cost model. A process for relating IT costs to the services provided to users is defined. An appropriate level of awareness exists regarding the costs attributable to information services. The business is provided with rudimentary information on costs.
5 Managed and Measurable when
Information services cost management responsibilities and accountabilities are defined and fully understood at all levels and are supported by formal training. Direct and indirect costs are identified and reported in a timely and automated manner to management, business process owners and users. Generally, there is cost monitoring and evaluation, and actions are taken if cost deviations are detected. Information services cost reporting is linked to business objectives and service levels and is monitored by business process owners. A finance function reviews the reasonableness of the cost allocation process. An automated cost accounting system exists, but is focused on the information services function rather than on business processes. Goals and metrics are agreed to for cost measurement but are inconsistently measured.
6 Optimized when
Costs of services provided are identified, captured, summarized and reported to management, business process owners and users. Costs are identified as chargeable items and could support a charge-back system that appropriately bills users for services provided, based on utilization. Cost details support service levels. The monitoring and evaluation of costs of services are used to optimize the cost of IT resources. Cost figures obtained are used to verify benefit realization in the organization’s budgeting process. Information services cost reporting provides early warning of changing business requirements through intelligent reporting systems. A variable cost model is utilized, derived from volumes processed for each service provided. Cost management is refined to a level of industry practice, based on the result of continuous improvement and benchmarking with other organizations. Cost optimization is an ongoing process. Management reviews goals and metrics as part of a continuous improvement process in redesigning cost measurement systems.