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6 Rules for Long-term Showback or Chargeback Success

Oct 22, 2019 | By Wil Cleaveland

Bill of IT Service Cost Modeling Showback & Chargeback

In recent weeks, we’ve covered two crucial topics around the process of building a new showback or chargeback model: the differences between showback and chargeback and the 3 major execution strategies to calculate a bill of IT.

But for organizations navigating this journey for the first time — choosing a model type, satisfying initial requirements, and launching a monthly bill of IT — there are several best practices to understand along the way.

So, building on what we’ve discussed so far, this post offers six high-level rules, both strategic and tactical, for long-term showback or chargeback success.

Rule #1: Assemble an Advisory Board at the Beginning

It’s important to stay in close contact with every stakeholder group who interacts with your showback or chargeback – to ensure value is being realized, document feedback for potential enhancements, and identify problems in need of immediate attention.

That said, the best way to ensure clear communication across the business is to establish a showback/chargeback advisory board on day 1, before work to build and launch the model even begins.

The board should meet regularly and include, at a minimum, constituents from each of the following core groups:

Rule #2: Don’t Wait for Perfect Data

Organizations frequently cite problems with data quality, completeness, and availability as the main hurdle to launching a new showback or chargeback. However, these fears are often unfounded.

Very few organizations start with perfect data. Most start with “good enough” and improve over time. Only after sufficient testing, iterating, and refining does the data get better.

In truth, the pursuit of perfect data is a catch 22: organizations delay new projects like showback or chargeback due to data concerns, but the only way to improve bad data is by taking the plunge and creating the impetus to fix it. You don’t know what you’re missing until you start looking for it; and there’s less incentive to get things right when dollars aren’t at stake.

So don’t wait for perfect data to take the first step.

There’s almost always enough good data to get started. And simply getting started is what matters most.

Rule #3: Avoid Runaway Complexity

It’s always a challenge to balance simplicity and complexity in the service catalog and cost model. There’s continual pressure to create new, more granular service definitions to match consumer demand. But with each new definition, the service catalog and cost model become more burdensome to maintain.

Furthermore, stakeholders often don’t realize that maximizing technical accuracy isn’t always the best choice from a financial perspective, e.g. adding a new service might not result in a material cost difference for the business or IT.

Here are three simple tips to manage the conversation and prevent complexity from spiraling out of control:

Rule #4: Map the Bill of IT to Business Capabilities

After the model is dialed in to produce reliable, accurate results on a monthly basis, the next step in maturity is to start mapping costed services to business capabilities. In other words, the goal is to add another dimension to analyze costs and align them with value.

So, instead of consumers only seeing how much they spent on each service or app, they’ll also see the tangible business functions that spend enables.

Granted, this might sound like a complex task, but all it requires is time and collaboration.

Here are three high-level steps to categorize services and applications into business capabilities:

  1. Meet with consumers to clearly define business capabilities.
  2. Consult service and application owners to determine the business capabilities they support.
  3. Based on the information gleaned from both stakeholder groups, determine a reasonable allocation of service/app costs to each previously established business capability.

Rule #5: Educate, Educate, Educate…

A perfectly executed showback or chargeback isn’t worth much if no one knows what it means or how to use it. What’s more, stakeholders are far more likely to resist, criticize, or, worst of all, abandon the model if they don’t understand what it’s capable of doing for them.

Here are four tips for keeping stakeholders informed on the functionality of the model and the value it can deliver:

Rule #6: Build Firm Processes for Reacting to Change

When it comes to technology, the only constant is change. As a result, it’s always a balancing act to maximize the technologies your organization uses today while planning for the technologies it will use tomorrow.

Keep these three tips in mind to stay ahead of the curve:

A Step-by-Step Guide to Showback or Chargeback

To learn more about building a showback or chargeback model — and how to use that model to deliver a defensible bill of IT — download a copy of our new eBook: How to Produce an Effective Bill of IT Using Showback or Chargeback.

Inside, you’ll get an in-depth explanation of everything it takes to launch and maintain a successful showback or chargeback, with detailed guidance on each phase of the process.

Click here to download your copy of the eBook.

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