17
Mar
09

The Cost-Charging Policy for Corporate IT

This morning, I have a constructive discussion with my boss to understand how do we as the IT Organization of the Company is being charged on the types of efforts, service level agreements and expenses through our Business/Operations.  Not to mention about how these costings are reflected in the Company’s Profit and Loss spreadsheet, the percent allocation to IT, to each P&L (short form for profit and loss) of each individual IT organization in a country from a regional perspective.

The business is trying to reduce the IT development costing from one of the Customer account I am managing and the topic of Corporate IT cost is being mentioned.  A substantial amount of the individual country’s P&L or annual funding as I presume is allocated to the local country’s corporate IT costing.  My doubts to the argument with my boss on this topic is what are the IT services/domains are covered in the annual allocation and from there onwards, we can determine the conditions in any SLA document (if we have at this point) that covered the parts of the development charges to be reduced.

Based on my experiences, general IT services like data migration, server maintenance, ad-hoc database scripts for data extraction and user administration’s activities should be covered as per in the SLA as a routine IT service charging.  However for any new developments to the solution, this should be a separate charging entity that we also terms as software development or release management as these are not routine IT service management activity and to be considered as a project itself.  We should not consider the resources being assigned to do IT support that is covered in the SLA to take away their headcount’s allocation for the project.  A IT project and IT service support should be treated as 2 different IT components in the Organisation’s costing.

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