The manner in which chargeback is introduced and communicated to users can make the difference between success and failure. If the switch to a chargeback process is overly complex or is made too quickly, users tend to be unclear about the charges and are more resistant to the change. One best practice involves establishing an initial transitional period during which a limited number of storage parameters are monitored and users are sent invoices for information-only purposes. This method is often referred to as “memo-back.” Once users are familiar with the process, additional storage parameters can be incorporated and actual invoices can be sent.

Lastly, chargeback initiatives often fail because the process is isolated from other IT financial management processes. According to industry analyst firm Gartner, organizations implement a standalone spreadsheet-based chargeback system in 80 percent of cases. Many of these initiatives fail because companies have great difficulty establishing the necessary link between chargeback and other financial management processes such as planning/budgeting as well as IT service level, configuration, change, release and performance management processes. The presence of well-defined systems and IT Infrastructure Library (ITIL)-compliant processes to support each of these areas greatly improves the chances of chargeback success. For example, effective configuration management procedures lead to more accurate information about what storage resources are in use. As a result, the chargeback system is supported by more reliable, available and accessible data.

Clearly Define Chargeback Objectives
Companies that have achieved success in implementing chargeback follow a clear methodology that begins with a definition of objectives that answer the questions: What do you want to achieve, and how can this be done simply, accurately and fairly? The financial services company in the above example needed to eliminate the overprovisioning of storage and make users aware of the costs that resulted from storage capacity not being utilized. So, it chose to make utilization the sole focus of the chargeback effort.

Accurately measure costs.
The chargeback team must develop an accurate cost model to measure the actual usage to be translated into financial costs. The failure to accurately capture costs can damage IT’s credibility in the eyes of the users and have a negative ripple effect on all the other interdependent financial management processes such as capacity planning. The components of the model may include human resources, facilities, IT infrastructure, software, hardware and services costs. The actual components that are included should be based on the objectives of the chargeback effort and the level of detail that is appropriate, and should ensure that costs in the model are not double counted.