The document discusses tracking the full costs of IT services, including time spent, assets used, and underlying infrastructure costs to enable accurate internal chargeback across departments. It provides an example methodology for attributing total costs to specific services and customers based on their usage and consumption. The goal is to improve transparency around IT costs and budgets while strengthening relationships with business stakeholders.

1. Cor Winkler Prins
CEO
cor.winklerprins@4me.com
Service Cost Tracking & Internal Chargeback

2. Elements to track for each service:
▪ Cost of time spent
▪ Cost of assets
▪ Cost of underpinning services
Service Costs

3. ▪ Requires time tracking capability
▪ Should cover 100% of time spent by people in IT department,
including, time spent in meetings, training holidays, sick leave
▪ Requires project management functionality to track time spent
on strategic initiatives
Cost of Time Spent

4. ▪ Cost of assets should reflect depreciation of assets
▪ Must include amortization of maintenance/support contracts
Cost of Assets

5. ▪ Typically for application services
▪ Covers cost of the capacity of infrastructure services
they use, such as:
▪ Servers
▪ Databases
▪ Storage
▪ Datacenter Network
Cost of Underpinning Services

6. Cost of Underpinning Services

7. Service Costs
ERP (SAP)
Personal Computing
Network Printing
CRM (Salesforce)
SLA Support User
Service Targets Satisfaction Rating Cost Risk
84%
78%
81%
87%
4.7
2.1
4.5
4.1
$54K
$14K
$127K
$89K
3%
2%
1%
12%
High
None
Low
Medium

8. EMA Study Highlights
Asked about IT Service Cost Tracking, respondents answered:
▪ 92% - Significantly improves relationship with business
▪ 81% - Significantly reduces IT service costs
▪ 83% - Increases IT budgets
▪ 60% - Best performed on a unified platform
Source: EMA IT Service Cost Research
Valerie O'Connell, Research Director
ENTERPRISE MANAGEMENT ASSOCIATES (EMA)
August, 2021

9. Cost Tracking White Paper
https://www.4me.com/white-papers

10. ▪ To enable chargeback (or showback) the costs of an IT
department need to be attributed to a service, as well as
a customer
▪ The costs of an IT department can be related:
1. to a service and a customer
2. only to a service
3. only to a customer
4. neither a service or a customer
Cost Attribution

11. 1. For each service, register each customer’s consumption
2. Extract the costs related to both a service and a customer, the costs
related to a service but not a customer, the costs related to a customer
but not a service, and the costs related to neither a service or customer
(i.e. overhead)
3. Spread costs related only to a service over the customers of this
service by % of usage by each customer
4. Spread costs related to only a customer over the customer’s services
by % of the customer’s sub-total cost per service
5. Attribute overhead costs to a service and customer
by % of each customer’s sub-total cost per service
Service Cost per Customer Calculation

12. Example
▪ Customers:
▪ Sales
▪ Marketing
▪ Services:
▪ Email
▪ CRM
Service Cost per Customer Calculation

13. Step #1
Service Unit Sales Marketing
Email # of Employees 40 20
CRM # of Licenses 30 10
Determine service consumption by customer

14. Step #2
Service Sales Marketing Shared
Email 15,000 8,000 12,000
CRM 50,000 25,000 30,000
Unspecified 20,000 40,000 200,000
Grand total: 400,000
Extract cost by service and/or customer where possible
= Overhead

15. Step #3
Service Sales Marketing
Email
15,000 + (12,000 * 40) / (40 + 20) =
23,000
8,000 + (12,000 * 20) / (40 + 20) =
12,000
CRM
50,000 + (30,000 * 30) / (30 + 10) =
72,500
25,000 + (30,000 * 10) / (30 + 10) =
32,500
Spread shared service costs over customers

16. Step #4
Service Sales Marketing
Email
23,000 + 20,000 *
23,000 / (23,000 + 72,500) =
27,817
12,000 + 40,000 *
12,000 / (12,000 + 32,500) =
22,7867
CRM
72,500 + 20,000 *
72,500 / (23,000 + 72,500) =
87,683
32,500 + 40,000 *
32,500 / (12,000 + 32,500) =
61,713
Spread customer costs not related to a service over
the customer’s services

17. Step #5
Service Sales Marketing
Email
27,817 + 200,000 * 27,817 /
(27,817 + 87,683 + 22,787 + 61,713) =
55,634
22,787 + 200,000 * 22,787 /
(27,817 + 87,683 + 22,787 + 61,713) =
45,574
CRM
87,683 + 200,000 * 87,683 /
(27,817 + 87,683 + 22,787 + 61,713) =
175,366
61,713 + 200,000 * 61,713 /
(27,817 + 87,683 + 22,787 + 61,713) =
123,426
Spread overhead cost over the customer’s services
Grand total: 400,000

18. Service Cost per Customer Calculation
Consumption Email CRM
Sales 40 30
Marketing 20 10
Email CRM Unspecified Customer Costs Total
Sales 15,000 50,000 20,000 85,000
Marketing 8,000 25,000 40,000 73,000
Unspecified Service Costs 12,000 30,000 200,000 242,000
Total 35,000 105,000 260,000 400,000
Customer Overview - Sales
Service Direct Service Costs Shared Service Costs Indirect Customer Costs Overhead Total
Email 15,000 8,000 4,817 27,817 55,634
CRM 50,000 22,500 15,183 87,683 175,366
Total 65,000 30,500 20,000 115,500 231,000
Customer Overview - Marketing
Service Direct Service Costs Shared Service Costs Indirect Customer Costs Overhead Total
Email 8,000 4,000 10,787 22,787 45,574
CRM 25,000 7,500 29,213 61,713 123,426
Total 33,000 11,500 40,000 84,500 169,000
Grand total: 400,000

19. Cor Winkler Prins
CEO
cor.winklerprins@4me.com
Service Cost Tracking & Internal Chargeback