The IT groups have traditionally used a Service Catalog concept to implement a Chargeback / Showback system for their mainframes. The intent was to “recover” the annual budget charges associated with the mainframe depreciation expense and other related expenses. While this type of approach has inherent problems, it was the basis for early Service Catalog models.
With the introduction of open systems, cloud computing, and other competing sources for the IT budget, the Service Catalog model is transitioning from a “recovery” approach to a “retail” approach. That is to say, the Amazon retail model is being adopted by IT for the Service Catalog. In fact, all other vendors offering Bill of IT products and services are doing so using a Retail model for the Service Catalog.
The Retail only approach for a Service Catalog does not address the issues associated with the “shared resources” that are present in most IT shops. Open systems, mainframes, disk systems, etc. that are present are more suited to using a Recovery type approach for the Service Catalog. The bottom line is this: A comprehensive Service Catalog for most IT shops will use more than one method for the definition of services and will use a “best fit” approach to define its contents. Trying to “force fit” all IT services into a Retail only model leads to frustration and inconsistent results.
Model
Catalog Methods
The Service Catalog Model is divided into four methods. While the Recovery method can still be used within the model, the Lease and Meter methods are intended to replace it, and will result in a more consistent Bill of IT.
Retail: The Retail method is used for commodity resources that can be provided by the IT group as well as other competing vendors. Examples of these integral resources can include desk top computers, support tickets, cloud computing, and other commercial offerings. This method is the current means for many of the automated products that provide information for the Bill of IT.
Recovery: The Recovery method is the traditional Chargeback / Showback that has been traditionally associated with mainframe processing. This method will “recover” the annual costs associated with the shared processing of large capital investment. Unfortunately, this method is based on an annual timeframe and uses Tax Code based allocations to form the funding basis. This combination results in an inconsistent and unfair price for the clients.
Lease: The Lease method is intended to replace (along with the Meter method) the traditional Recovery method. The Lease method is used for shared resources that are used in a dedicated manner (i.e. disk storage). Funding is based on the Total Cost of Ownership and the Life Cycle of the resource.
Meter: The Meter method is intended to replace (along with the Lease method) the traditional Recovery method. The Meter method is for shared resources that are used by the client community (i.e. mainframes, Software Oriented Architecture, etc.). Funding is based on the Total Cost of Ownership and the Life Cycle of the resource.
Method Properties
For each Service Catalog method, there is a set of properties associated with it. These properties help to define how an IT resource can be identified and how its related services are described and priced within the Service Catalog.
Purpose: The Purpose is a short description of the resources that are associated with the method.
Cost Horizon: The cost (and thus pricing) time period associated with the method.
Resource Type: Defines the type of resource associated with the method. The scope of the resource is either integral or shared, and the data source of the resource is either commodity or proprietary.
Usage Type: Defines how the resource is used by the end user. The usage type is generally: Ownership, Dedicated, and/or Community. For a resource that is integral in nature, the client takes ownership of the resource and uses it as they wish. For shared resources, the client may be a dedicated user (i.e. disk), or part of the larger community that uses the resource.
Pricing Policy: The Pricing Policy defines the business considerations used when determining the Service Catalog pricing information.
Price Formation: Price Formation defines the manner for establishing a Service Catalog price.
Pricing Frequency: The Pricing Frequency determines how often the Service Catalog price needs to be calculated.
Attributes: The Attributes are used to define some of the characteristics of the method.
Behavioral Drivers: The Behavioral Drivers is the criteria that influence the client’s behavior toward IT. There are four drivers:
Simple: The pricing method is well defined and easily understood.
Fair: The pricing method is fair and equitable to all.
Predictable: The pricing method allows a client to understand their costs now and in the future.
Controllable: The pricing method allows a client to control their future costs.
