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Cost Coverage

A1

Determine the scope of IT services (for example, essential, subscription, and discretionary services) whose costs are allocated to business units.

Improvement Planning

Practices-Outcomes-Metrics (POM)

Representative POMs are described for Cost Coverage at each level of maturity.

1Initial
  • Practice
    Monitor cost practices ad hoc, occurring on a best endeavour basis.
2Basic
  • Practice
    Apply the accounting and allocation model to key IT projects.
    Outcomes
    • Key IT projects are covered.
    • The accounting model is applied to the key or most visible IT projects initiated by business units.
    Metric
    % of IT projects covered by the AA model.
3Intermediate
  • Practice
    Use the AA model for IT essential services (email, telephony, etc.).
    Outcomes
    • Essential IT services are covered by the AA model.
    • IT and the rest of the business gain better understanding of the IT costs.
    Metrics
    • IT Productivity: [Cost per standard IT output].
    • % of IT costs charged back to business by projects and services.
  • Practice
    Use the AA model to track key IT costs of all business units.
    Outcome
    Separation of project and infrastructure costs is established.
    Metrics
    • IT Productivity: [Cost per standard IT output.]
    • % of IT costs charged back to business by projects and services.
  • Practice
    Apply chargeback accounting at the essential IT service level to standardize IT charges to all business units.
    Outcome
    The IT function is better able to control costs, as required by the rest of the business.
    Metrics
    • IT Productivity: [Cost per standard IT output].
    • % of IT costs charged back to business by projects and services.
4Advanced
  • Practice
    Expand the AA model application to major subscription and discretionary services.
    Outcomes
    • The IT function is better able to justify the introduction of innovative discretionary services for the business through confidence in cost recovery.
    • The IT function is able to better plan the IT portfolio (e.g., “run the business” IT costs vs. “change the business” IT costs).
    Metrics
    • Relative IT Intensity: [Ratio of IT inputs consumed to staff employed].
    • Relative Value Added: [IT attributable Value Added per IT Resource Unit (VAITRU)].
    • Business Productivity: [Cost per standard Business output].
  • Practice
    Apply chargeback to all IT services.
    Outcome
    Chargeback is embedded as one of several ways that IT shares project and program level funding with other business units.
    Metrics
    • Relative IT Intensity: [Ratio of IT inputs consumed to staff employed].
    • Relative Value Added: [IT attributable Value Added per IT Resource Unit (VAITRU)].
    • Business Productivity: [Cost per standard Business output].
  • Practice
    Introduce incentives to business end users for demand management and cost reduction.
    Outcome
    The IT function is better able to justify the introduction of innovative discretionary services for the business through confidence in cost recovery.
    Metrics
    • Relative IT Intensity: [Ratio of IT inputs consumed to staff employed].
    • Relative Value Added: [IT attributable Value Added per IT Resource Unit (VAITRU)].
    • Business Productivity: [Cost per standard Business output].
  • Practice
    Apply all appropriate Global Accounting Alliance (GAA)and other appropriate best practice standards.
    Outcome
    The IT function is able to better plan the IT portfolio (e.g., “run the business” IT costs vs. “change the business” IT costs).
    Metrics
    • Relative IT Intensity: [Ratio of IT inputs consumed to staff employed].
    • Relative Value Added: [IT attributable Value Added per IT Resource Unit (VAITRU)].
    • Business Productivity: [Cost per standard Business output].
5Optimized
  • Practice
    Optimize the IT accounting model continually, to ensure that the full scope of IT services is always covered by the accounting model.
    Outcomes
    • By having all IT services covered by the accounting model the organization can accurately quantify the value provided by IT.
    • This comprehensive and accurate view of IT costs enables the IT function to continually support strategic decisions.
    Metrics
    • % of relevant costs directly charged back to Bus.
    • Absolute Value Added: [IT attributable Value created (ITVA) per IT Resource Unit (ITRU)].
    • Net Present Value (NPV) of IT projects.