Author: Brian P. Creswick

Overview

At the highest level, business strategy is responsible for the ultimate success or failure of any organization. Yet those working internally for an organization--senior executives, managers, and supporting staff--as well as investors and business observers, often misunderstand what the very term "strategy" means. At Project Performance Corporation (PPC), we believe in a simple, clear definition: A strategy takes an organizational vision or objective and bounds the options for attaining it. Without a strategy, all roads may lead to the future; with a strategy, a selected set of roads is open for travel. If developed and conveyed correctly, a business strategy provides focus on achieving business objectives, facilitates consistency in actions taken, and instills confidence in the overall direction of the organization.

In today's world of rapidly changing and emerging technologies, organizations are being forced to focus heavily on the establishment of a sound information technology (IT) strategy to ensure the successful execution of their business strategy. This IT strategy is aimed at enabling IT decision makers and their supporting organization (often referred to as the information services [IS] enterprise) to more effectively recommend and deploy appropriate technologies to support business units (BU) within the organization. Ultimately, the IT strategy can help the IS enterprise understand how to maximize the value gained from IT expenditures while minimizing expensive support structures for traditionally "stovepiped" systems.

This paper introduces IT financial management as a critical aspect of an organizational IT strategy. It specifically provides an overview of how costs incurred by the IS enterprise in support of the BUs can be recovered--a practice that is widely known as IT chargeback. In this discussion, we address the major opportunities, considerations, approaches, and benefits for implementing and/or modifying IT chargeback schemes in an organization.