From Value-Driven IT Management

3.5 CFFs and CSFs for Transfer Charging

But this was just one example. What are the most common pitfalls when implementing a transfer charging regime ? In other words, what are the critical failure factors (CFFs)?

  • Introducing IT transfer charging without any clear understanding of (or communication of) its objectives, how it is going to achieve these objectives and the difficulty, complexity, costs and risks associated with it. ( ESPs do this and we want to be seen to be more like an ESP, don t we. The word duh comes to mind.)

  • Not allocating the entire cost base to the services sold or cross-subsidizing services or simply not allocating costs accurately to services, resulting in users not having a true picture of the cost of service provision. This may be done consciously by the IT function for services that are readily comparable with those of ESPs to make them appear as though they are competitively priced. ( Please don t outsource us because, look, we are competitive in the marketplace. )

  • Not making provision in the pricing structure to fund such costs as infrastructure refresh, product development, research, disaster recovery infrastructure etc. ( I didn t ask for any of those things so I m not paying for them. )

  • Defining chargeable services in such a way as to be easy for IT to measure rather than defining them in an end-to-end way that relates to the user s experience of the service, e.g. billing for utilization of the WAN/LAN, mainframe MIPS etc. rather than...

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Topics of Interest

3.6 IT Governance There is one more issue that I must get out of the way before I set out the value-adding CSFs. That issue can be summed up in the word governance . Just as effective transfer...

3.2 The Objectives of Transfer Charging So what are the theoretical objectives of transfer charging for IT products and services between an IT function and its business users (and are those...

3.3 The Principles of Transfer Charging There are two poles of transfer charging implementation, namely, the cost recovery model and the market-based pricing model (in practice, implementations...

Learning Objectives After reading through this chapter you will be able to: Understand the importance of the knowledge bridge between the analyses of the internal environment and the external...

3.1 The Transfer Charging Debate Before I begin to set out my proposed best value practices I need to get out of the way an issue that underpins many of the practices I am about to discuss. That...