Blogger: Larry Cannell
One approach we’ve seen enterprises take to recover the costs for providing a communication, collaboration, or content management service is to use an internal chargeback mechanism. IT plays the role of an internally-sourced service provider. This approach works well for simple services like, for example, audio conferencing. Simply charge a per minute fee for each participant (Number of callers * Number of minutes * Per minute cost = Total cost of the audio conference). It’s a simple formula that everyone understands and it does a decent job of relating usage to the resources required to deliver the service.
But, applying this same approach for recovering costs to other collaborative applications gets much more difficult. Case in point, a recent post on the Microsoft SharePoint Team Blog points to a Gartner case study which describes the deployment of SharePoint at Pfizer. What I found most interesting was this paragraph about chargebacks:
“Pfizer initially implemented a chargeback approach. The business departments are charged a flat fee for each SharePoint site they created. Costs were assigned to the primary owner of the department of the site and a detailed use report was provided to each department head listing every site that was assigned to them. This approach has worked well as the businesses wanted greater transparency in service costs than they had received in previous content management solutions. However, the IT department found that they have had to grant a lot of exceptions in the per site fee and it is no longer practical. In 2009, they are considering moving to a model based on storage volume (x$ per gigabyte of storage per year) rather than the per-site fee.”
This is a good example of how a chargeback system can drive user behavior. Charging per SharePoint site sounds counterproductive to me. Anyone can create a new sub-site and it hardly takes up any resources at all. Sub-sites are a valid way to organize information in SharePoint, so why discourage it? I expect this model might have been better aligned with some of the products they are replacing with SharePoint.
In any case, there is a good chance a per-GB chargeback model won't work much better. By pricing per site they were discouraging use of a powerful feature in SharePoint (sub-sites) but by pricing per GB they are discouraging other use cases as well. As a result, at a time when money is tight and management starts soliciting ideas for saving money from their departmental budget, we could see the business units consolidating SharePoint sites, or moving files to other systems which charge less for storage, all to avoid internal chargebacks. In the end, there will likely be little or no change in the TCO for all of these systems and (worse) it creates a lot of extra work for people moving files around (lots of activity, but no impact on the bottom line).
While I think an internal SaaS model can work it has to be done at a level that doesn't encourage the wrong behavior or causes internal systems to compete with each other.
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