I’ve been involved in probably a dozen conversations with IT organizations over the past three months regarding various phases of the development of an internal cloud/private clouds/ITaaS instance. In every single one of those discussions, chargeback has become a hot button of debate, and I feel the need to add some external perspective to what I’ve been hearing.
The Way it Has Always Been
When I bring up the concept of chargeback or a rate card for internal ITaaS consumption, I almost invariably encounter the pushback that “the business” won’t accept chargeback, that it’s never been done there, and that it’s a non-starter of a conversation. If there is a manufacturer in the room, they will typically default to the “next best thing” approach of saying “of course they won’t, but you should do showback”. The manufacturers seem to believe that showback is a warm pre-cursor to chargeback, and that by giving the business units reports of what their consumption actually costs, it will pave the way for chargeback in the future. I think showback is effectively a cop-out, allowing the manufacturer to give lip service to the objection without really pressing the real point.
The Logical Flaw
During these projects, I usually get the chance to interview the stakeholders (IT side) of a project, and often the internal customers (business units). What I hear is that the IT folks believe/know they are competing with AWS or another external provider. From the business unit side, they readily admit they are often using an external service, and paying for it every month. So if the business is willing to pay for the external service, why is internal chargeback such a taboo?
The Way Forward
The difference is that the business units see value in the services the hosted providers deliver, value that is incremental to what they can get currently from internal IT. It is true that they are not willing to pay for internal IT services today, because today those internal IT services don’t provide a level of value the business feels is worth paying incrementally for. This is the business side driver for an ITaaS instance, in terms of responsiveness, availability, and/or performance. If IT were able to operate and provide the capabilities the outside providers are able to, then internal chargeback would be acceptable, as it is delivering that incremental value.
It’s usually at this point that I’m able to explain to the IT staff that the ITaaS instance they are trying to build is more than just a fully virtualized data center instance. As such, to truly be ITaaS, it will require the value added orchestration, portal, operational hygene, and yes, chargeback components, to differentiate it from the IT of the past. If they only build the infrastructure, and don’t change the operations, then a lack of appetite will become a self-fulfilling prophecy, though it need not be.