Notional charging – these chargeback alternatives address whether a journal entry will be made to the corporate financial system s. One option, the ‘two-book’ method, records costs into corporate financial systems in one fashion (for example, with IT as a cost centre ), while a second book is kept but not recorded. This second book provides the same information but reflects what would have happened if the alternative method of recording had been used. This can be a good transitional model if chargeback practices are moving from one methodology to another.
Tiered subscription – involves varying levels of warranty and/or utility offered for a service or service bundle, all of which have been priced, with the appropriate chargeback models applied. Most commonly referred to as gold, silver and bronze levels of service, the weakness of tiered subscriptions is that there is no non-repudiation and it does not encourage different behaviour with regard to usage.
Metered usage – involves a more mature financial environment and operational capability , where demand modelling is incorporated with utility computing capabilities to provide confidence in the capture of real-time usage. This consumption information is then translated into customer charging based on various service increments that have been agreed, such as hours, days or weeks.
Direct Plus – this is a more simplistic model where those costs that can be attributed directly to a service are charged accordingly with some percentage of indirect cost s shared amongst all.
Fixed or user cost – The most simplistic of chargeback models, this model takes the cost and divides by an agreed denominator such as number of users. This model contributes little to affecting customer behaviour, or identifying true service demand or consumption, but does allocate the costs to the bottom line of multiple businesses in the easiest, if somewhat inequitable, fashion if so desired.
No matter which methodology is used, or none or all, it is more important to make certain that the overriding substantiation comes from providing value to the business .
5.1.4.3 Financial Management implementation checklist
The tracks indicated below serve as a sample checklist of recommended implementation steps that should be addressed. The guidance below is not intended to be a project plan , but a representation of a phased approach to implementation.
Track 1 – Plan
Critical questions about the business and IT culture should be addressed prior to moving forward with implementing Financial Management . Refer to previous chapters and ITIL publications for a discussion on organizational considerations that should be considered before designing processes.
Key to setting of practices is assessing the corporate culture. Geographical considerations, such as one location versus global distribution, will have additional regulatory and compliance considerations.
Identify all internal and external contacts that provide and/or receive IT financial information.
Be clear about IT and business expectations. What deliverable s do both organizations expect from the implementation? Does the business or IT expect a chargeback system ? Is there currently a Service Catalogue implemented and awaiting pricing ?
Determine systems that are in place from which Financial Management will receive and contribute data.
Determine the funding or operating model to be used. This will set the tone for the way accounting and valuation will be performed.
Assign responsibilities for the deliverables and outline the activities to be performed.
Prepare the organization chart based on activities that will be performed, the size of the data that will be managed, and tools that are available.
Prepare a policy and operating procedure s list.
Track 2 – Analyse
The analysis portion of the implementation should involve gathering in-depth details around the planning and funding items previously identified. The most in-depth task will be analysing the data surrounding service valuation and demand modelling .
If either IT or the business holds expectations about deliverables, work backwards to make certain that all processes and information required to produce the expected deliverables are accounted for as part of Financial Management responsibilities. Often, a chargeback methodology drives implementation of Financial Management with perceptions of multiple levels of service. However, as the availability of financial information is analysed, it becomes apparent that collection and reporting of the various levels of demand is not possible and there is no real value in even having multiple levels of service.
Become familiar with current expenses in preparation for creating new valuation and funding document s. There may be immediate issues that come into view after reviewing expenditures. Of critical importance may be the realization that not all IT expenditures are collected into one financial centre. Frequently telecommunications charges are disbursed among numerous business organizations. To properly report and account for services costs, centralization of IT expenditures is a prerequisite.
Once an accounting of all IT expenditures has been completed, service valuation should be performed. Reports should be produced that provide for the first element of valuation pricing of service asset s. If the operating model allows for the addition of value-add pricing, then the next step is to add that value to each service to calculate the total price for an IT service . Analysis and calculation of the value-add price will require a great amount of input from Service level management , Availability , Security and Capacity Management. This is a critical calculation since business perception of value and price can be miscalculated and create an unwanted effect.
If during the analysis phase it becomes apparent that Financial Management dependent processes are not available, the plans for implementation must be adjusted. For example, if no IT Services have already been identified, then valuation will be postponed until the catalogue of services has been agreed.
Track 3 – Design
The design phase creates the outputs that are expected from a Financial Management implementation. Working with key contributors and supporters is paramount during this track. Design is done around data inputs and translations, reports, methodologies and models.
Process es – identify all processes in place within IT and design clear hooks into Financial Management.
Valuation Models – should be prepared and tested for appropriateness to the business environment .
Accounting processes – from the learning obtained from the initial accounting of IT expenditures, processes and procedure s should be finalized. Reports should be identified that will be pertinent to the operating model and business environment, for example, cost trends by different classifications, and financial analysis of ROI, ROA and TCO.
Chargeback methods – create the chosen chargeback methodology.
Procedure s – complete design of FM policies and procedures.
Role s and responsibilities – prepare job description s and fill required roles.
Track 4 – Implement
Implementation involves activation of planned processes. The initial input will come from corporate financial system s and Change Management processes. Key hooks to data translations come through:
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