Why use chargeback systems?
- People take it for granted when something is free.
- Make managers responsible for the IT they incur.
Chargeback system
Management practice of billing business departments for services provided by an in-house IT center.
Objectives chargeback systems
- Cost recovery
- Resource allocation
- Efficient utilization of IT resources
- IT performance evaluation
- IT planning assistance
- Increase user awareness/involvement
- Increase IT staff awareness
Types of chargeback systems
- Cost recovery
- Standard cost pricing
- Average pricing
- Flexible pricing - Profit center
- Fixed pricing
- Market based pricing
Measures for evaluating value of IT
- Find capabilities competitors can’t match.
- Compare competitor capabilities with own capabilities.
- Measure the capability without IT.
Pitfall in measuring IT value
- Measure IT value only based on competitive advantage.
- Calculate the ROI of IT investment too early.
What is IT value?
Organizational performance impacts of IT.
inc. Productivity enhancement, profitability, cost reduction, competitive advantage, inventory reduction, market share.
- Efficiency
- Effectiveness
Efficiency
Doing things right, Internal
Effectiveness
Doing the right things, External
IT Value creation model
IT Resources (TIR + HIR) + Complementary organizational resources = Business process = Business process performance = Organizational performance
Technological IT resources (TIR)
- Infrastructure
- Business applications
Human IT resources (HIR)
- IT skills
- Managerial skills
Business process performance
Operationally efficiency of specific business processes.
Overall firm performance
Including productivity, efficiency, profitability, market value, competitive advantage.
Performance is also influenced by:
- Industry characteristics
- Country characteristics
- Trading partners resources and business processes
Business processes
- Operational excellence
- Customer intimacy
- Product leadership
Business performance measures
- Supplier relations
- Production and operations
- Product & service enhancement
- Sales & marketing support
- Customer relations
