Skip navigation

I don’t understand why people and organizations sometimes stop thinking halfway through a problem. We see something that costs money and we avoid it even though we know it’s needed. Or we get rid of it without wondering why it was implemented in the first place, then have to replace it with other, less effective tools and processes that cost more. I’ve done it myself – remember, I’m Often Dopey!

But it’s one thing to make a mistake and another to wilfully look the other way when we know that a decision that’s good in the short term or narrow view is bad in the longer term or broader scheme of things. We should all expect ourselves to place the long-term good of society above that of the enterprise, and of the enterprise above the division or department and so on down the line. Whatever level we work at, we should expect our managers and leaders to do this even more as they rise in responsibility and seniority. The more we move up the organizational ladder, the more we should be expected to demonstrate breadth of vision in both time and space. So it upsets me when I see any organization make a decision that is good for one area or the short term, but bad for the larger enterprise or the longer term. Sadly, it happens all the time in governments and corporations and even homes. And people wonder why I’m Always Grumpy.

Chargeback, or cross-charging, or internal billing if you prefer, is one of those things. It costs money to do, and more to do properly. It’s hard to see the immediate benefit. It’s complex and, frankly, difficult. Done wrong, it can waste scarce financial and human resources. Done right, it generates heated discussions that are often perceived as unnecessary distractions and disruptions. It’s often avoided or neglected or discarded entirely. Why waste precious resources on chargeback? All the payments are coming out of the same corporate coffers anyway, right? It’s easy to just drop it, claiming all the way that what you’re doing is saving money for the enterprise. In large organizations, I will argue that this is rarely true.

Let me drag out one of my favourite analogies. Imagine a condominium residence building that was converted from rental units. The gas and electricity and water are on single meters; the bills are paid by the condo committee. The residents of each unit pay a monthly fee, based on the size of their unit, which includes upkeep and utilities. Everyone complains that the fees are too high, and they go up every quarter!

Now imagine average Joe & Jane, residents. They leave their lights and radio on all day to keep the computer and TV company while they’re at work. When they get home, they change the channel on the TV and check the e-mail and Twitter feed, then go take nice long hot separate showers. They blow-dry their hair and throw a couple of items of clothing in the washer so their favourite socks will be clean. They put a pot on the stove to boil for pasta then stand in front of the open fridge deciding what to eat. They choose bacon and eggs, so they turn off the pot of water and get out a frying pan instead. While they eat, they settle down in front of the computer (with the TV still on) and order some new halogen light fixtures, which are beautiful even though they’ll use a lot of extra power. They put a couple of dishes in the dishwasher and run it half-full because they don’t want dirty dishes. They go out for a walk, leaving the appliances running. When they come home they put their small load of clean clothing in the dryer and turn the TV off, but the computer stays on. They haven’t bothered to set the programmable thermostat to lower the temperature at night. You can just hear them thinking, “it won’t make a difference anyway and everyone else does it. Why should I work at it for their sake?”

As monthly fees rise, the residents wonder why it’s so expensive. They vote down the committee’s costly recommendation to install separate metering: the size of each unit is probably a fair representation of everyone’s proportional resource use, so the initial and maintenance costs of separate meters are just a waste of money, which is already tight. Costs continue to rise until finally, separate meters are installed. All of a sudden, Joe and Jane find themselves paying huge monthly utility bills and a much lower condo fee. They use the programmable thermostat, remind one another to turn out the lights, take showers together, run only full washer loads and think about fluorescent bulbs. Their total costs drop even though they’re now paying for separate meters.

Does this sound familiar? Or at least reasonable given human nature? Now translate the TV and the fridge and the computer and the halogen lights and the long hot showers and small washer loads into ad-hoc database queries and under-used servers and hastily-written code and huge volumes of unnecessary data storage and you can see where I’m going with this. I believe that effective chargeback pays.

If the enterprise charges its own lines of business a fair monthly fee based on actual resource utilization, it becomes a utility, effectively a private cloud that can be billed back as IaaS or PaaS or SaaS depending on the situation. The leaders of the lines of business will encourage their teams to keep costs down. They may still wonder why IT costs are high, but they’ll be able to compare them to similar costs elsewhere, e.g. from outsourcers. They’ll demand accountability not only from IT but also from their own organizations. They’ll insist that applications be designed and code be developed with economy in mind; they’ll ask their staffs to consider batch runs instead of ad-hoc everything; and they’ll make their business decisions with real costs in mind. Now wouldn’t that be nice?

Effective chargeback for IT services is not trivial or inexpensive, but it is indispensable in large enterprises.

Jonathan Gladstone is alwaysgrumpy at or follow me on Twitter @jbglad59.


Go ahead and comment... don't be Bashful!

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: