IT Services cost modelling : Stop comparing apples to oranges

Complexity and options in the IT services eco-system is ever increasing. Which is putting the IT services responsible on a hot spot. Can you trust your cost models and charging for IT services?  Even if they are good to go today. How do you update and change the cost components as your IT service delivery model and/or organization are changed … again? Taking in consideration strategic decisions such as in-house versus outsourced production of IT services are often made with the goal to reduce IT services cost. What if the base facts are wrong?

The road to get to improved cost modelling starts with a first step by assessing your cost as defined in your service catalog. Do they at all reflect the actual cost for delivering the services? Have you analyzed how you distribute managerial costs?

A common way of distributing internal service desk costs is done by number of users per geography / per provided language support. With the effect that large countries in traditional markets will absorb a majority of the service desk cost. Now what will that mean to your overall service desk cost and planned capacity should you be in a position that emerging markets are growing fast while traditional markets are shrinking?

A proven and structured way is identifying your cost drivers and how they are consumed when delivering your IT services. The concept of Activity-based Costing (ABC) has its origin back to the 1980s . What has changed is that complexity and cost for analyzing cost drivers and maintaining high quality of data over time has scientifically decreased, by using high degree of automation in analyzing your data and flexible tools for assessing and updating your cost model.