Tackling the cloudy issue of IT chargebacks

The hype around the emergence of cloud computing has highlighted a more far-ranging and longstanding issue felt in many an enterprise IT department: namely that of ownership. But Mark Settle, Chief Information Officer at BMC Software, believes that the cloud is providing businesses with a great opportunity to get their strategic approach to IT funding in order.

While the cloud is certainly not the IT industry's first attempt to harness cheap commodity computing power 'on the fly,' the hype around it has been fuelled by the high levels of uncertainty prevailing in the current economic climate.

In this context, for all the promise cloud computing offers to reduce capital expenditure and management burden, while increasing speed of response and ability for IT to flex and scale with business demands, it also reignites the knotty issues of IT chargebacks - an approach to IT funding that, due to its complexity, was in the past somewhat of a recurring nightmare for CFOs and CIOs.

Shifts in responsibility

IT budgets can be assigned by business unit, project or overall annual requirements. But cloud computing, as a centralised IT resource charged on a usage-based billing model, blurs traditional budgetary lines, reviving the concept of the IT function charging its costs back to individual departments.

In the past, chargebacks have been difficult to implement, as calculating the full cost of service delivery is an extremely complex process due the range of variables associated with it. With cloud computing, organisations can build flexible IT resourcing into their operational expenditure for managing cheaper, sustained and predictable business workloads. At the same time, they can access extra resource on-the-fly, when a business unit needs it, to get a new project up and running quickly for example, without having to factor in the extra hardware, power, maintenance and labour costs usually associated with new IT capital expenditure.

Putting IT in control

On the face of it, the fact that cloud computing is fundamentally based on a chargeback model would seem to put the CIO firmly in control of IT as a central business resource and enable him to alleviate at least some of the pressure on the CFO. But problems can still arise when a department queries their share of the budget in comparison to other departments or as a proportion of the IT bill to the business overall.

This is why it is essential that any CIO considering a move to cloud computing must work with the CFO to agree standard procedures upfront for procuring, accessing and monitoring cloud resources and service levels to ensure each business unit only pays for the IT they need and use. This is also why those IT departments with well-developed business service management (BSM) software deployments that allow them to align IT resource with business demand will already have a head start into the cloud, whether it is public, private or hybrid in its nature.

BSM enables businesses to align IT service delivery with the priorities of the business - ensuring that IT is supporting the business in the places it needs it most. Management software is key to managing this process and can be used to ensure that in the case of pay-as-you-go computing, budgets can be set depending on the relevance each user group has to the business priorities at any one time.

By using BSM tools in this way it becomes a great deal easier for the CIO to set procedures for cloud procurement and subsequent chargebacks. Get it right and IT funding becomes a vastly simpler process, guaranteeing that business departments pay only for the resources they consume - and ensuring that the post-recession CFO has one less challenge on his plate.