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:
- Business unit consumers
- Service and app owners
- Cost center managers
- Change management staff
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:
- Break out new services using a phased approach. Once a service is defined and in-use, discontinuing it can be a battle. In other words, it’s far easier to add specificity than it is to subtract complexity, so always err on the side of simplicity and only break out new services as needed.
- Understand stakeholder motivations. Business units want detail to track consumption, finance wants granularity for billing, and internal IT stakeholders want technical accuracy. Be ready to defend the balance of simplicity vs. complexity with all this in mind – showing stakeholders how the desire for more granularity doesn’t always trump the practical utility of existing definitions.
- Establish materiality thresholds. Work with stakeholders to agree on what warrants a “material” cost difference for changes to the service catalog. Afterward, every request should be judged against that threshold.
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:
- Meet with consumers to clearly define business capabilities.
- Consult service and application owners to determine the business capabilities they support.
- 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:
- Utilize a variety of mediums. Everyone consumes information differently. Accommodate stakeholders’ learning styles and preferences by delivering information in a variety of formats like lunch and learns, a monthly newsletter, etc.
- Teach functionality by topic and stakeholder group. Make it easy for stakeholders to learn what’s most relevant to them by focusing on one topic or set of capabilities at a time.
- Develop intro packets for brand new users. Succinct training materials will be needed to get new hires up to speed quickly.
- Be detailed and transparent about changes. Anytime there’s an alteration to the service catalog, cost model, or bill of IT, give stakeholders an in-depth explanation as early as possible.
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:
- Communicate early and often. To guarantee everyone knows what’s on the horizon, stay in close communication with decision-makers, be aware of the changes they’re considering, and share that information out on a regular basis.
- Ensure collaboration between IT and Finance. Before making any changes, it’s crucial to check that metrics are in place so consumption can still be properly measured by IT and billed by Finance.
- Manage expectations. Business leaders and consumers may not always have a clear understanding of what’s required to alter the service catalog and cost model. To avoid conflict, make sure everyone understands the time, effort, and material threshold required for changes.
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.
