Yes, we've done various ABCs as well which provides us with better insight into costs for operational budget, capital projects and so forth. But we've also employed various methods that James has outlined in order to effectively detail and justify just what it costs to have an in-house IT shop.
In the past, Senior Managers from other business groups often felt it's no sweat and reasonable to okay their own staffs requests for IT goods and services. They did this without knowing the true costs and impact on the tax rates, reserves, or what have you. They would often have various vendors sell them on a solution and then submit a request to IT for that solution without any proper justification, etc. just before budget submission giving IT little or no time to qualify succinctly the requests.
Then when we in IT are responsible to present these unjustified requests as budgetary requirements to the various committees (council, finance, IT Advisory, etc.). Often requests were approved based on the fact that many of the affected staff are on those same budget committees. Or they were disapproved because it did not fall within a specific budget percentage less tax rate impact. This last item often done without discussion or understanding of the impact on the organization if an IT item was or was not approved.
At the end of the day, IT's budget for capital and minor capital projects have increased or decreased significantly without expanding operational budget and relating it to the organization's bottom line. Often, it was not realized that the operational budget would then carry subsequent years of budget increases due to support and maintenance contracts, training, etc.of any approved IT request.
Currently, utilizing our process of what we call "actualization", each Senior Manager on down knows in advance what it will cost to add a new staff member to their complement, what it costs to introduce new IT projects and what it costs to the organization if they do or don't follow through with justification of the request. This is accomplished by combining various financial budgetary modelling such as ABC (activity based costing) analysis, Cost and Profit Centre budgeting as well as employing SLAs (service level agreements). In fact, the SLAs help the management staff understand exactly what they will be getting for the core services such as a desktop PC with O/S, network connection and a phone, as well as extended services such as Oracle Client (ODBC), business solution applications, etc.
Charge backs is a dirty word to most in government circles. In reality, it's the cost of doing business regardless if you are public sector or private. Just think how far your organization can go in today's reality if you did not provide the IT tools to your staff. In public sector, IT does not seek to create revenue but to provide cost sharing opportunities, whether from within or other public/private sectors. IT does not look for profit but contributes to it in more ways than one.
