August 23, 2012

The World of IT Financial

The Phoenician Resort

Scottsdale, AZ
Using a Usage Based Cost Model for
     Planning and Control
The use of “tax code” funding for a cost model only allows for determining actual amounts (i.e.
chargeback). The inconsistent pricing that results from this type of cost model cannot be used for
forecasting or budgeting, and abdicates the end user responsibility in the planning process. Open
Systems, SOA, Virtual Platforms, and other technologies further exacerbate the situation by creating
conflicting cost models. These create confusion, frustration, and ultimately discontent from the end
user. This situation can be remedied with a Usage Based Cost Model. Based on the asset’s
investment cost and related annual expenses, the model can be used for annual forecasting,
budgeting, and actual reporting (i.e. chargeback).

In this session we will define the framework of a Usage Based Cost Model, and will:
     --  Discuss the role of investment cost and related recurring expenses within the model
     --  Discuss the role of annual expenses and how they can be accommodated within the model
     --  Discuss Cost Perspectives that can be used to form different metrics for Business and IT
         measures such as Activity Cost, Cost of Service, Cost of Delivery, etc.
     --  Discuss how the model provides for annual forecasting, budgeting, and actual reporting
     --  Discuss how to integrate the Usage Based Cost Model as part of the initial “buy decision”

At the completion of this session you will have a good understanding of the Usage Base Cost Model.
This will allow you to define a cost model during an asset’s “buy decision” that is explainable,
predictable, and can be used for subsequent forecasting, budgeting, and actual reporting activities.


           ITFMA 2012 - Summer