This article is a translation of the German article “Ein wirklich effizientes Service-Modell erfordert ein Umdenken”.
Timm Bauten (Director Management Consulting and Solutions):
Many companies are faced with the question of how IT services can be billed fairly and transparently and how they can be efficiently managed.
My answer: Impossible at the same time.
This is an issue with conflicting objectives and a false assumption.
Should services be billed “fairly”?
If the term “fair” is understood to mean detailed usage-based accounting: no
If it means that efficient services are offered in such a way to IT customers that they understand the costs: then yes. But I would rather call this “transparent”, as it requires leaving the “usage-based” mantra.
You have to decide between these two aspects.
Verified by simulations, a usage-based accounting, from a certain point onwards, leads to more money spent on more accurate billing than ultimately is shifted from the right to the left pocket of the company.
In the end to require the business unit X top pay an extra 2,000 Euro (they really use) than another business unit Y, all IT customers might have to pay an additional controller to do the fully correct math.
In addition, it is also no longer possible for customers to verify a truely exact usage-based accounting.
As head of global consulting at a former employer, I was charged for the printed pages of my consultants. I (and, hypothesis: other business managers) could not do anything useful with it. This is neither verifiable nor does it enhance meaningful steering.
How much easier would it have been, if I had been charged for one IT workplace per employee including printing costs, software, etc.! Because I knew how many employees I had. So that would have been easy to check.
And also relevant for steering: For my own good, I would have quickly cancelled the workplace for an employee who changed departments.
Should services be billed transparently?
There is a common objection to a billing system that combines the services in a way that is comprehensible to the customer and therefore less usage-based.
The concern is that customers will not accept this. Department X also uses Visio in addition to the Office suite, the own department only uses Office. Shouldn’t I get get the workplace cheaper, because a cheaper license is used?
Of course, a consideration has to be made here; an expensive CAD program can certainly be charged separately from the workplace.
For most tools, however, it quickly becomes apparent (with sufficient transparency) that the effort for billing is higher than the costs saved (in just one department, those cost will be payed by others!).
In addition, different workplace configurations balance out. And an automated license-saving return of unused licenses is also much easier if they are not explicitly billed.
The important thing is that customers can see what is paid for what and how little difference the additional Visio license actually makes in the neighboring department.
This requires a tool that transparently displays the complete billing.
Detail of the origin of costs for “workplace mobile hardware”:
How can services be steered efficiently?
Especially if you quit usage-based billing and go “all inclusive” for some products, the argument that the ability to steer is lost comes up sooner or later.
Apart from the fact that all-inclusive offers (e.g. in the vacation industry) work well in many areas already, transparency can make a crucial contribution to the ability to steer.
For each service, one responsible person is required, who is in charge of the complete provision of services, for example, also of quality and efficiency.
This person may well notice that the service for printing is more expensive for everyone because one department prints books all the time. Whether it is worthwhile to discuss this then lies within his/her discretion.
But if services are now tailored in such a way that the goal is steer-ability and optimization by one person, what is with the goal of designing services in such a way that they can be billed as comprehensibly as possible?
IT products for the presentation to the customer
This contradiction can be resolved by a new “object”: the IT product. This is designed in such a way that it combines the services into a unit which is easy to understand for the customer. Ideally, the numbers for the calculation can then be determined automatically, e.g., heads.
One product could be, for example, the IT workplace, to which the services network, Internet, intranet, PC, laptop, mouse, printing, basic software, and other services are charged. Services will then only be charged via products.
The focus can then be put on comprehensibility without opposing the optimization of the underlying services.
IT products unlink services from customers and thus optimization from billing:
Conclusion for efficient billing of services
- Say goodbye to usage-based billing as the driving principle
- Separate into IT products and IT services according to the type of optimization required and charge only the IT products to the customers
Feedback and discussion are always welcome!
Please leave your reply or comment below the German version of this article (the use of English is ok there) to keep the discussion in one place. Thank you!