We specialize in the Costing of Shared Resources. In the past, the sharing of resources was limited to proprietary mainframes and their associated users. That is to say, the processing was only on one system and was based on a community of different users sharing that system. Mainframe processing has long supported usage attribution and has a very robust set of tools and solutions in support of this.
With the introduction of Open Systems and Software Oriented Architecture, resource sharing now includes Inter System Sharing as well as Intra System Sharing. The rich set of mainframe solutions is not portable to the Open Systems environment and a new set of tools and techniques is required for the Costing of Shared Resources. We are the one organization that does this.
We are focused on the fair and consistent attribution of Capital Investment costs to the clients and business units that use those resources.
Capital Investment
Under a traditional Chargeback / Showback system, the cost of a Capital Investment is “recovered” annually based on the depreciation amount dictated by the Tax Code. This leads to unfair and inconsistent usage pricing.
In our approach we focus on the Total Cost of Ownership and not the Tax Code. A resulting price model includes: Capital Expenditure, annual associated expenses (for the asset life), the lifetime Green Costs, and a calculation based on the time value of money. Couple TCO with a Life Cycle Usage calculation and you have the ability to establish a fixed lifetime usage price for the asset.
Shared Resources
Shared Resources can now consist of commodity (Open Systems), proprietary (mainframes or specialized solutions), or some combination of both (Software Oriented Architecture). Sharing is further complicated in that a single resource can be shared in a dedicated and/or community manner.
We understand these sharing requirements and utilize Metering and Workload technologies for our solutions. Metering technology allows us to accurately attribute community processing for one or more systems, even if they are different platforms or processing power. Workload technology not only allows for the attribution of usage to a logical group or business unit, but allows for the dynamic usage sensing (time-of-day, day-of-week) of inter system resource use.
We believe that a true understanding of the Costs associated with Shared Resources will not only benefit the business as a whole, but will mostly benefit the end user client and the IT Governance Stakeholders.
Clients
The end users of IT processing want to be responsible users of the resources, but they need reliable and consistent information to do so. This information must be in business friendly terms that are fair, consistent, and predictable. Traditional Chargeback / Showback systems do not fulfill this requirement due to their reliance on the Tax Code for its funding.
We provide the ability to establish a fixed price usage charge that does not require periodic over/under adjustments. The result is a Chargeback / Showback system that is explainable, consistent, and above all predictable. Coupled with the ability to fix costs for shared resources (i.e. disk, file servers, etc.), the end user will understand how their behavior translates to resource usage and its associated cost.
IT Governance Stakeholders
The IT Governance Stakeholders need information for decision support. This information may be based on Life Cycle, Demand, or some other criteria, but above all the metrics must be defined and measured in business friendly terms.
We use a well defined and proven methodology for the preparation of costing metrics for these stakeholders. The resource usage attribution is consistent and allows for time based measurements, benchmarking, forecasting, and other governance requirements pertaining to IT stakeholders.
Attributing shared resource usage requires the detailed measurement of IT use, and to fairly allocate that use to a business oriented framework. Our solutions are specifically designed to perform this function. The result is a Costing process that provides business oriented cost metrics and direct input into a Chargeback / Shareback system -- even for Open Systems.
Service Catalog Model
There is no definition of a Service Catalog, so we developed a model that can be used to define the entries within one. The model has four types of entries: Recovery (existing Chargeback), Retail, Lease, and Meter.
The Lease and Meter types pertain to shared resources and is the focus of our solutions. The Lease and Meter methods are intended to replace the Recovery method due to the inherent problems associated with traditional recovery methods. By using a Total Cost of Ownership model, the new methods allow for fixed pricing and a more stable Service Catalog.
Costing
One of the main issues with the Costing of shared resources is the ability to measure resources that are not identical in nature (different platforms or processing power). By using a combination of System Normalization, Metering, and Activity Based Costing, our solutions allow for the accurate and consistent application of usage (and thus cost) to Shared Resources.
Normalization is the process that determines the power rating of a particular system based on a fixed standard. Metering is the application of system power over time. By using both of these techniques along with ABC and other processes, our solutions allow for the consistent measurement of business IT processing in both standard and native system terms.
Cost Metrics
Without consistent measurements, it is not possible to provide cost metrics that are of any value to the business. Normalization and Metering allow for the translation of IT processing into reliable business oriented cost metrics. This information can be provided on an informal basis or more formally as a Bill of IT.
Our solutions provide two forms of Cost Metrics: Business Unit Cost and Manifest Cost. The Business Unit Cost is the costs associated with a particular unit, group, or organization. This is the information that is mostly associated with budget type reports. In addition, we provide Manifest Cost information that is related to a particular type of activity. This could be the cost of a simple item (i.e. enquiry, ATM transaction, etc.) or a complex activity that includes human capital (i.e. claim, policy, etc.).
Chargeback / Showback
Traditional Chargeback / Showback systems are inherently unfair and inconsistent due to their reliance on the Tax Code for recovery funding. Because of a reliance on only annual costs (both expense and depreciation), the pricing model is complex, inconsistent, and requires over/under adjustments to compensate for the shortcomings.
Our solutions are based on TCO and Life Cycle Usage calculations resulting in fair and consistent usage pricing. Coupled with system Normalization and Metering, our Chargeback / Showback information provides a consistent and predictable attribution of shared resource usage without the need for a periodic reconciliation process. This information can be provided as part of an existing Chargeback / Showback system or more formally as a Bill of IT.
