The Joy: Shared Responsibility
Using chargeback for internal IT services assigns cost to the cost-causer. Consumption can be monitored, and responsibility is shared between the IT organization and its internal customers. Now, there must be some give and take in that. Costs shared at an aggregated level would have some meaning, but lack effectiveness in consumption control, as the cost drivers are not visible or manageable. To get to the bottom of things, you have to get granular.
In the private sector, this could mean showing the marketing department the true cost of all those MacBooks versus standard PCs. In the public sector, it’s about attributing IT costs to specific grants or other federal funding sources, which is essential for compliance. A robust chargeback system should be able to handle this, whatever the qualifying service may be.
From my years of observation in both private and public sectors, there are many cases where business units and departments need to distinctly account for their operating cost. This allows business leaders to use the data for effective decisions and government executives to fully utilize the funding they receive. Not only is chargeback itself valuable, but doing so in a hierarchical (business unit to sub-division) manner is also important. This structure helps business units or agencies break down costs and the chargeback system to become a value-added service.
The Pain: Transparency
Pain can be a sign of progress, like the soreness after a good workout. Similarly, transparency can be painful, but yields good results. Charging back IT services provides visibility to stakeholders in both the private and public sectors.
In the private sector, chargeback helps determine the total cost of goods sold. In the public sector, it gives executive and legislative branches a clear picture of the true cost of providing IT services.
The real pain comes when people are called to account for their consumption – and further when they have to do something about it. Yet, a well-designed chargeback system can help solve these issues. Analyzing consumption trends can help the IT organization predict seasonal changes or shifts in demand, which in turn aids in demand management.
While creating the systems and environment to do IT services chargeback well can be challenging, the juice is worth the squeeze. All parties involved will benefit from the knowledge a chargeback system provides to stakeholders and end users.
Postscript: as some readers may be well aware, chargeback has been gaining increasing prevalence in both private and public sectors. The Technology Business Management (TBM) is a strategic framework for managing IT value. Integris Applied has supported clients through these initiatives and written on TBM and IT Financial Management. If you’re interested in any of these subjects, please contact me directly any time!
Kevin Schultz, August 2025 – [bio]
