I have explained the IT service charge back model in this presentation. Although the charging is internal and their is no real money involved but it helps to evaluate an IT department's performance on objective measures. Moreover, it helps to do proper cost allocation to company's products.

1. IT as a Profit CenterImplementation of Charge back Mechanism Aksam Dar (aksamdar@gmail.com)

2. Agenda What Business Units perceive about IT Department a Cost Center perspective Disadvantages of treating IT as a cost centerboth for business and IT Design of a Chargeback Model using ITIL and Best Practices Benefits of Chargeback Model revisiteda more clear picture Question & Answer Only in the end Perception Why Not What to do Transformation of IT as a profit centeror you can say a “Value Center” How to do it Benefits Q & A

3. Perception about IT

4. What Business Units perceive about IT A Cost Center A burden on income statements Taking away a big chunk of budget. Geeks sitting with no idea of how business works Revenue eaters Security Maniacs hurting business by putting restrictions on PCs and IT services. I don’t care whatever they say or do. I am the business and I run the show. There are so many people working over there yet noone bothers to answer the phone when I call Service Desk Though its not their fault

5. Why Not to Use Cost Center Approach

6. Free It services to business In-accurate financial analysis. Ignoring high cost IT equipment (routers, switches, firewalls, load balancers, Racks, SAN Storage, cables, bandwidth, leased lines, vendor support services, license renewals), Depreciation of IT assets as per share of services consumed. Cost of IT services not included in P&L of profit centers. Cost of IT Payroll not allocated to profit centers. In-correct pricing for products offered to the customers because of missing cost components. We are over worked. They always come up screaming. Its user’s fault. We resolve in 2 working days. They have same problem every time. They can’ even fix it themselves. Poor quality It services Disadvantages of Cost Center approach A second line of text could go here

7. Transformation of IT Service Management

8. Different pricing structures for different services One time fixed fee Monthly fixed fee per department Monthly fixed fee per user of the service Fee per incident / call Benefits of Chargeback True picture of Business performance. Measurement for IT’s performance on objective basis Monthly/Quarterly/yearly revenue Profit & Loss Chargeback Model Start charging for IT services

10. Work orders is issued by Business Unit (BU). The Work order identifies the SLA against which the work order is issued and that becomes the basis for charge back. New Hire Hardware Required Software Required Service Required Tickets are also issued by BU in the same pattern of as a Work Order identifying the SLA. Incidents Change Requests How it Works Work Orders / tickets charged against SLAs

11. What is for sale? A sample list of services New Hire | DELL PC New Hire | iMAC 24 X 7 internet 24 X 7 premium internet (No restriction on gmail etc. More expensive than normal internet service) 24 X 7 email Corporate LAN Access Corporate LAN premium Access (With Local Admin rights) Help Desk Support Backup & Recovery service Printing Service Onsite dedicated Support Resource SAN Storage space FTP accounts And lots more …………

13. New hire | Dell laptop + blackberry

14. New hire | macbook pro + iPhonePerformance measured by Profit Lets launch some sales campaigns also to increase revenue

15. How Business units are billed A Sample Invoice

16. Building a proper CMDB is very important. Configuration Items should be classified. Connections between Linked Items will help to track every single asset. How to keep track Configuration Items

17. Sample revenue break down from SAN Storage

18. The Pricing structure Calculate Total Cost of Ownership (TCO) Direct Costs Hardware Software License Support Indirect Costs Administrative Overheads (e.g. Indirect Payroll Cost) Include reasonable Profit Margin How to calculate the reasonable price

19. Benefits of Chargeback (Revisited)

20. IT is not a show stopper. You will get what you will ask for…… by paying for it. IT is not a burden on budget. We are making profit. Business is the one who incurs expenses on IT services. No extra cost to Group. Intra company transactions eliminated in consolidated financial statements. BUs in full control of their IT expenses. Benefits of Chargeback (Revisited)

21. Question & Answer

22. Thank you – That was IT