Daily Archives: May 28, 2011

Does your company do an “IT chargeback”?

An IT chargeback is an internal accounting procedure where your company charges departments for the cost of IT support.  They do this to help organizations understand that IT is not free.

You see, it’s easy for a department manager to think IT support is free when the IT employees are part of the same company. So, if they want programming customizations, they merely submit an endless wish list of new enhancements, changes, etc.

The problem, , , IT is not free, , , IT support costs your company millions of dollars each year.

If a department had to obtain programming support from an outside company, they would pay anywhere from $50 to $150 per hour for the work they request. Our company has to pay for this whether it uses internal programming resources or an outside company, , , so it’s always a real cost to provide these services.

In order to reflect IT support usage, companies sometimes charge the non-IT departments a percentage of the total IT cost based upon how big they are. It’s called an “IT chargeback”. I’ve seen this calculated by department revenue, by number of employees in the department, or just flat percentage rates the company imposes.

What accounting will do is spread the total IT expense out to all the departments of the company, , , until the “net expense for IT shows $0.00. It’s only an internal accounting procedure to spread support costs out to the organizations using the support.

Usually when a company decides to do this, they add budget dollars to non-IT departments who will receive these allocations. If the IT department spends exactly what they budget for, there will be a zero budget impact to the non-IT departments.

If your company plans to implement a chargeback policy, be prepared for some push back by the non-IT departments. They don’t like it.

They view their department being charged for things they don’t do and it possibly affecting their financial performance. In reality, it won’t affect financial performance at all because the non-IT department gets additional budget dollars added to their budget to cover it, , , but I can tell you firsthand there will be resistance from the department heads.

When implemented well, all organizations gain a better understanding of the costs associated with IT support and have more incentive to manage their IT support need.

Yogi said it

Some of you may not know who Yogi Berra is. Well, , , he was a famous baseball player who played for the New York Yankees from the late 1940’s to the mid-1960’s.

He was a great catcher and was voted Most Valuable Player of the American League three times and hit the most home runs for a catcher by the end of his career. His New York Yankee teams played in 14 World Series winning 10 times, a record at that time for a player.

He was a very successful baseball player and one of the most quoted people in the world. But, it isn’t his baseball that made his so famous.

What Yogi is more noted for are the press quotes he was famous for saying.  They are unique to say the least.

There were many, , , so many there is a book titled, The Yogi Book. One of his press quotes is on the cover, “I really didn’t say everything I said.”

Here are just a few. See if you have heard any of them:

“It ain’t over ’til it’s over.”

“90% of the game is half mental.”

“You can observe a lot by watching.”

“Nobody goes there anymore; it’s too crowded.”  Talking about a restaurant.

“A nickel ain’t worth a dime anymore.”  One of my favorites!

“It’s deja vu all over again.”

“90% of short putts don’t go in.”  After missing a putt in a charity golf event

“When you come to a fork in the road, take it.” Another favorite of mine

“We’re lost, but we’re making good time.”

“Always go to other people’s funerals; otherwise they won’t go to yours.”

“Pair up in three’s.”

“It’s not too far; it just seems like it is.”

“You’ve got t be careful if you don’t know where you are going ’cause you might not get there.”

“The future ain’t what it used to be.”

I have a copy of this book sitting in my office and pull it out ever now and then when I need a break from the work. Yogi took his profession seriously but he wasn’t so serious to forget about the fact there are other things important in your life. He was successful and had a sense of humor.

Wouldn’t you have to have a good sense of humor if you said these things?

MDE Enterprises highlighted in Profile Magazine

Our company was highlighted in the May/June edition of Profile Magazine. Check them out at www.profilemagazineonline.com.

Lots of interesting articles.

Read the article.