Charge for Is Services

Executive Summary

The objective of this report is to illustrate how the introduction of the chargeback, fee for service, model by the I.S. department will transform I.S. from a cost center to a value center. The transformation will have a positive impact on the Profit and Loss of the company.

The report looked at the current situation where I.S. provides services to the entire organisation and all the cost is carried by the I.S. department. I.S. receives in excess of 200 requests on a monthly basis and it is extremely debatable whether all requests received are required and/or if they add any value to the business. By charging the business for the services they will be more aware of the cost they impose on I.S. and it could influence their behaviour. The price of the service can be established according to different policies and the proposal is to have a fixed agreed price depending on the type of service. It is not always easy to calculate the Return on Investment (ROI) when it comes to IT solutions as the ROI is purely focussed on the financial return. A more practical and realistic measure for I.S. will be to calculate the Return on Value (ROV) which include both financial and intangible benefits. I.S. adds benefit, especially intangible, to the business areas but this is never measured and often goes unnoticed.

The report concluded that if I.S. had to charge the business areas for the services that it provides the number of requests received will decrease resulting in more dedicated focus on business critical issues which will improve the business perception of I.S.

The report recommends that the I.S. department introduces the chargeback model for all the services provided to the business areas. By introducing a chargeback model the I.S. budget must be allocated to the business areas and all cost must be moved out of the I.S. cost center and into the cost center of the business area that it services.

Background

The I.S. (Information...