Enable IT Chargeback | Implementing an Effective IT Chargeback Process | Advantages and Disadvantages of IT Chargeback

Advantages and Disadvantages of IT Chargeback

chargeback pros and cons

IT Chargeback: PROS


Chargeback can be an effective governance mechanism in an organization. It can reveal the resource requirements of running different departments, develop managers into better decision makers, and ultimately improve the performance of the entire organization.


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Implementing an Effective
IT Chargeback Process

IT chargeback can result to a reduction in resource consumption by cutting off unnecessary demands from users, thus increasing the IT department’s ability of serving a larger clientele, as well as providing a wider variety of services. Furthermore, IT services will be streamlined to customer requirements and IT investment decisions will be more effective. It can also create a marketing mentality among the IT personnel, with them becoming more cost-efficient and customer service oriented. This will eventually raise the credibility of the IT department to a cost-conscious corporate management because all cost allocations will be supported by services requests and usage analysis.


For other business units that avail IT services, IT chargeback will give them the chance to establish priorities. Chargeback may ensure that only the projects with utmost importance are given top priority. It also allows other business units and the IT department to put a value on each of the IT services provided. Furthermore, IT chargeback may allow the potential to improve the relationship between the IT department and other business units by giving both sides the opportunity to learn more about how the other side works and what challenges they are facing. This awareness will lead to better appreciation of the services that either side provides.


Related Topic: Enable IT Chargeback

Costs will be reduced and there will be a greater, more intimate relationship between IT and other business units. IT chargeback, in general, can provide more accountability and controllability on IT assets and services, as well as timeliness and congruence with the general goals of the organization.


IT Chargeback: CONS

If not properly implemented, however, chargeback may worsen the relationship between IT and other business units, primarily due to concerns about the fairness of applied charges. It may be difficult for users to evaluate the benefit of IT chargeback if the billing and charging process is not clear to them. Seeing the actual cost of each IT service may also discourage IT initiatives among business units, especially if the IT service rates are high and they fail to understand why these rates are high.


To properly implement IT chargeback and reap its numerous benefits, organizations need a reliable usage monitoring system that is capable of easily generating a wide range of simple and readable reports that any user will be able to understand and appreciate.


Learn more about how Open iT business solutions can help in the proper implementation of your organization’s IT chargeback system. Schedule a live demo today.