Business Processes
The main purpose of IT
operations is to provide the
services that are needed to
support the business
processes. For if not for
the business, there really
would be no need for the
IT group.
Cost Allocations
Individual IT processing
costs need to be identified
and linked to the
appropriate business
processes. The resulting
cost allocations must not
only identify business
consumers and products,
but they must also reflect
the cost reality with little or
no distortion of the
underlying values.
Controlled by Consumer
With better information
being provided to the
business consumer about
the use of IT resources, it
is possible to better
manage the cost of those
resources. The
responsibility for service
activity falls to the
business consumer and
can be managed through
business tools such as
budgets, forecasts, etc.
IT Cost Transparency:
Vertical Cost
"If you don't measure it, people will know you're not serious about delivering it." --
James Belasco
Business Cost
To put it simply, the fair and equitable
allocation of shared IT resource costs to
business processes is the means to
linking IT costs to the business. While this
sounds like it is a simple task, it is not
one that cannot be readily done without
programmatic assistance.
For each business consumer or
service product, there will be a series of
charges that must be calculated and
accumulated on a monthly basis. The first
set of calculations is to determine the
shared costs of the processing and is
based on a usage metering framework.
Once the initial calculation is complete,
the sum of the corresponding charges
represents the cost of the business
process (business consumer or service
product).
Vertical Cost Allocation
Vertical Cost Allocation can be thought of as the summation of the different shared horizontal costs
for each business process. In order for this to work, it is necessary to define the business processes
and to map them onto the IT operational processing. In this manner it is possible to measure the IT
usage for each business process and then assign the corresponding costs to that process.
RG Solutions® understands the need to define business processes within the IT operational
environment. It provides the means to establish a processing framework that reflects the business
structures and processes. Through a simplistic interface resembling a spreadsheet, the user is able to
quickly establish the names and rules for the business entities that are to be linked with IT
operational costs. This information is then applied to the incoming business and technical information
to determine the corresponding costs of the business processes.
Business Deliverables
Through an established IT Cost Transparency program, the business will fully realize the ability to
make informed decisions about present and future IT provisioning. When the program is fully
implemented, the business consumer has its corresponding IT consumption information provided to
them in terms they understand and are familiar with.
RG Solutions® has the ability to define the business process cost metrics and to present this
information in the terms the business consumer can understand. It has the ability to provide
information that can be used in a Bill of IT, usage history analysis, unit cost breakdown, and other
consumer analysis. It also has the ability to integrate other data related to the business processes for
a complete metric in the context of the business defined framework.
