The true benefit of Cost Distribution of IT resources is too often lost in the wake of mis-matched invoicing principles and political compromise.
Traditional distribution principles rarely take into account the modern mainframe billing mechanisms, and where actual invoicing is taking place it is common to see larger business units getting a discount.
In the end there tends to be only little connection between who pays the most and what induces the highest IT costs, which almost certainly leads to false and costly optimization scenarios.
Show-back vs. charge-back
This is where show-back enters the picture. The aim of show-back is to reveal the true cost-drivers of IT operations – not to send an invoice to anybody.
Without an invoice there is no need for compromise and the distribution principles are allowed to match the complexity of those invoices the IT operations department must face itself.
As a matter of fact, show-back’s focus on costs (not prices) is often extremely valuable even in IT installations also doing charge-back (actual invoicing).
In show-back the primary objectives of distributing the cost of IT resources among business units are:
- to provide an understanding of the connection between business activity and operational costs;
- to visualize and appraise the many interfaces between the operations department and the business.
Increased awareness of cost drivers leads to cost-savings
First and foremost, documenting the users’ consumption of machine resources often results in behavior changes and thus turns out to be directly cost-saving.
The users often do not realize at all how much can be saved by not concentrating all IT activities between 10 – 11 and 13 – 14.
Next, it will become a natural thing for those users who are now aware of how new demands will result in increased operational costs to get involved in the justification of these costs in order to secure implementation.
The operations department no longer has to stand alone as the “department responsible for all those costs”.
And finally, it may strengthen the IT operations department that the organizational and business-related scope and reach of their services is visualized and appreciated.
Using ITBI™ for z/OS for show-back and cost distribution
ITBI for z/OS from SMT Data measures and reports the consumption of machine resources in technical terms – out of the box.
But these measurements can be organized with dimensions such as business area, organizational origin, application and service type.
It is even possible to create distributions in accordance with IBM’s mainframe invoicing principles, and the results can be reported from the tool itself or transferred to other (financial) tools as needed.
In this way it is possible to design a system that bridges the gap between technicians (who can explain the measurements) and the financial staff (responsible for the actual costs).
The tool is also effective in identifying cost-heavy business applications, transactions or departments/branches – a fact-based information source for decisions concerning outsourcing, optimization projects et cetera.
In addition, SMT Data offers services which ensure that all customers achieve the maximum benefit from the SMT products – regardless of cost model and sourcing situation.
by Jens Olesen, ITBI Director