1. LEVERAGING ITLEVERAGING IT
CHARGEBACK AS A COST
CUTTING TOOL
2009 ITFMA Conference, Charleston, SC

2. Presenter
 Rob Mischianti
 Nicus Software (http://www.nicus.com)
2
2
 E-Mail: rmischianti@nicus.com
 Phone: 540 387 2287 X22

3. Abstract
 Managing behavior and identifying costs are
primary purposes of most IT chargeback
applications. But learn how you can also leverage it
as a cost optimization tool that can:
3
3
as a cost optimization tool that can:
 Analyze the impact of new investments in technology
 Expose inefficiencies in production environments
 Assist in making informed sourcing decisions
 Provide metrics to support advanced cost modeling
and analysis that can lead to a better understanding
of IT costs

4. Questions
 Who can make the decision that
reduces cost and what data do they
need to make it?
4
4
need to make it?
 Are then motivated to make the change
that reduces the cost?

5. Overview
 Alternate Uses for IT Chargeback
 Expanded Role of IT Chargeback
5
5
 Several forces are causing IT
organizations to better utilize existing
Chargeback applications

6. Audit
ITIL, SOX
Compliance
Cost Cutting
Pressure
New Technology
(Virtualization,
Cloud Computing)
Integration
Requirements
(PPM, SharePoint,
Financial Systems)
Single Enterprise
Solution; not
Multiple Point
Solutions
6
6
IT
Chargeback
Demand for
Transparency
Web Reporting
Integration of
Managed
Services
Service Catalog
Integration

7. Forces
 Cost cutting pressure is increasing
 Demand for transparency
 Internal audit pressures on existing practices
Chargeback processes becoming more labor
7
7
 Chargeback processes becoming more labor
intensive; analysts care and feeding of existing
processes; instead of analyzing data……
 Drive towards integration of IT Financial
Management processes
 Existing COTS solutions need new approach

8. Cost Cutting: How?8
 Leverage Data to Enable Decision Making
by Resource Consumers
 Extend the Life of Physical Resources;
avoid premature resource upgrades
8
 Extend the Life of Physical Resources;
avoid premature resource upgrades
 Customer Saves Now; IT Saves Later
 Methodology Examples
 Can existing implementation be leveraged
as a cost cutting tool?

9. Meeting Requirements
 Transparency & Detail (Prerequisite)
 Cost Cutting
9
 Structure of Services

10. Solution Transition10
Decision Support
Tool
Cost Recovery
Tool
10
• Chargeback to End Users
Traditional IT Chargeback
• Chargeback to End Users
• Service Catalog Integration
• Cost Modeling & Analysis
• Transparency
• Additional Utilization Metrics
Next Generation IT Chargeback

11. Cost of IT Chargeback11
 New IT Chargeback: 0.5% of IT Budget
 Administration: 0.5% of IT Budget
11
 Costs Rising

12. Super Detail, Self-Service Web
Transparency

13. Transparency: Definition13
 Expose Methodologies (Who, What,
How and How Much)
Expose Data: Super Detail
13
 Expose Data: Super Detail

14. Super Detail14
Deeper
• Greater Granularity
• Who?
14
• Who?
• What?
Wider
• Additional Metrics
• Performance & Usage
• Identification

15. Mainframe
SAN Storage
Mainframe, Midrange
Telecom Systems
Time Tracking Systems
Excel
Access
EMC, IBM, Dell, NetApp, HP
Virtualized Environments
VMware, VMM, XenBatch, TSO, CICS, DB2,
MQ, IMS, IDMS, Measureware,
VAX/VMS, VM/CMS,
VSE, Storage, Tandem, WebSphere
265 + Data Sources Including:
Batch, TSO, CICS, DB2,
MQ, IMS, IDMS, Measureware,
VAX/VMS, VM/CMS,
VSE, Storage, Tandem, WebSphere,
AIX, Linux, More….
Mainframe, Midrange Distributed & Virtualized
Asset Management Systems
Telecom
Labor
Client Data
Dedicated Resources (HW & SW)
Project Management Tools
15
Access
Sequential (CSV & Flat)
UNIX, AIX, Linux
• Collect
• Consolidate
• Aggregate
• Normalize
Data Collection
• Provisioning Metrics
• Utilization Metrics
• Performance Metrics
Detail Level Metrics
Chargeback Database
Provisioning
Metrics
Performance
Metrics
Utilization
Metrics

16. Super Detail: Definition16
 More Data
 Objective: Enable Decision Making
16
 Customer Focused

17. Transparency: Obstacles17
 Resistance from Service & Product Owners
 More Expensive; to collect, store, present
and validate
17
and validate
 Fear
 Customer Motivations?
 Opportunities for Failure

18. Cost Transparency Preparation18
 Value Requires Super Detail
 Demand for Super Detail Increases Overall
Cost of IT Chargeback
18
Cost of IT Chargeback
 Larger Data Volumes: More to Process;
More to Retain
 Increased Cost to Deliver; Web only Part
of delivery
 Increased Labor to Monitor Validity

19. Data Collection Requirements19
 Data Source Planning
 Identify Available Sources
19
 Identify Available Elements
 Alternatives?
 Chargeback Monitors v Performance
Monitors (Event & Interval)

20. Current
• Customer Identification
(LOB, Agency, Cost
Center)
• Product/Service
• Unit Volume
• Cost
Future
• Customer Identification
(LOB, Agency, Cost
Center)
• Product/Service
• Unit Volume
• Cost
20
• Cost • Cost
• Additional Resource
Information (Program,
User, Application, Server,
etc)
• Additional Performance
& Usage Metrics

21. Presentation21
 Self-Service Web Site
 Reduce IT Chargeback Administration Costs
(Satisfying Queries)
21
(Satisfying Queries)
 Customers Meet up to 95% Reporting
Requirements Using Web
 Multiple Logic Views of Data
 Reports with Drill-Down & Drill-Thru
 Data Extracts (for large volumes)

22. Presentation22
 Large Data Volume
 Requires some performance and
capacity planning
22
capacity planning
 Larger IT Support or Vendor Solution

23. Product Level
Organizational
Level
LOB, Agency,
Cost Center,
Department
Services
(Mainframe Services
(Print)
Services
(Server,
23
Detail Level
Product Level (Mainframe
CPU, Storage)
Job,
Transaction,
Program, User
Job,
Transaction,
Program, User
(Print)
Document,
Device, User
(Server,
Storage)
Server,
Application

24. Presentation24
 Top Most Expensive Objects (by
Application, Cost Center)
Trended Unit Costs
24
 Trended Unit Costs
 Top Most Expensive Programs
 Top Variances in Unit Cost as Resource Level
(Program, Server, Application, etc)

25. Presentation25
 Identify Pain Points
 Profile Detail Level Transactions
25
 Top Most Expensive Programs
 Top Variances in Unit Cost as Resource Level
(Program, Server, Application, etc)

26. 26

27. Customer
Provisions
New Server
IT: Charges
Customer for
Provisioned
Resource
IT:
Allocates
Physical
Resources to
Pool
27
IT: Provides
Cost AND
Utilization
Data to
Customer
Customer
Recognizes
Over
Allocation
Customer
Reduces
Allocation
Resources
Returned to
Available
Pool

28. Enable Customer to Control Costs28
 Visibility
 Expose data
 Expose methodologies & processes
Proper Cost Allocation Methods
28
 Proper Cost Allocation Methods
 Resource based versus allocations
 Some services just won’t yield cost savings
 Improve Reporting: Super Detail
 Focus efforts on services that provide potential
for cost savings

29. Effective Methodologies29
 High or Low level allocation of costs
versus resource measurement based
Some product and services easier to cut
29
 Some product and services easier to cut
costs with others
 Annual Review

30. Effective Billing Methods30
 Construct billing methodologies to
achieve objectives
Don’t loose ability to meet original
30
 Don’t loose ability to meet original
objectives (fair, repeatable, etc)
 Proper planning and decision making at
appropriate levels

31. Sample 1: Mailbox
• FTE Allocation
• $11/Employee
Sample 2: Mailbox
plus MB Usage
• Combined FTE
Allocation &
Measured Usage
• $2/Access Fee
Sample 3: Mailbox
plus MB Usage
(Tiered)
• Combined FTE
Allocation &
Measured Usage
• $2/Access Fee
31
31
• $2/Access Fee
• $0.15/MB Mailbox
Size (after 50MB)
• $2/Access Fee
• $0.15/MB over
50MB
• $0.50/MB over
250 MB

32. Managed Services
 Managed Services Example: Print
32
32

33. Before
• Departments Own/Lease
Hardware
• Departments Pay Paper,
Toner & Supply Costs
• No Chargeback
After
• Supplier Owns and
Maintains Hardware
• Supplier Provides Paper,
Toner, Supplies
• Supplier Invoices IT
• IT Charges Departments
33
• IT Charges Departments
Based on Print Usage
• IT Provides Detail Level
Usage Reports: Full
Transparency
• Departments Have FULL
Control over print costs
• Cost Cutting Possible

34. Conclusion34
 Leverage Data to Enable Decision Making
by Resource Consumers
 Extend the Life of Physical Resources;
avoid premature resource upgrades
34
 Extend the Life of Physical Resources;
avoid premature resource upgrades
 Customer Saves Now; IT Saves Later
 Methodology Examples
 Can existing implementation be leveraged
as a cost cutting tool?