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Success Story - Marketing IT Services |
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Client:
High Tech Manufacturer |
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Project:
Effective Pricing of IT Services |
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Situation:
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One of the country's largetst high tech
manufacturers had recently merged with a major competitor in a multibillion
dollar acquisition.
After many of the initial issues were resolved, IT noted that the approach
to charging for IT services, which had varied significantly between the two
companies, was ineffective, inappropriate, incomprehensible and ignored by
most consumers of IT services. |
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Approach |
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A major initiative was launched by IT
leadership to assess and revitalize the mechanisms used to price IT
services. The objectives of the initiative included fairness,
uniformity, understandability and relevance.
After several months
of study, data collection, exploration and consulting with experts, the team
assigned to the initiative identified four cost-recovery methods that would
be implemented: |
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Personal -- Services requested and used by
individuals such as cell phones, e-mail and calling cards. Individuals
charged for services on a fixed-price basis for actual services consumed. |
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Contracted -- Services requested of central
IT by a business unit such as software development or infrastructure usage.
Business units charged for services on standard price basis for actual units
consumed. |
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Allocated -- Services provided to multiple
business units where costs cannot be measured. Costs are budgeted
annually and charged back quarterly based on an accounting allocation method
such as employees, revenue or number of servers. |
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Tax -- Undistributed costs incurred by
central IT recovered through G&A. |
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Results |
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The implemented methods allowed business
units and individuals to understand what the IT line item costs that
appeared on their P&Ls were for, which costs they were able to control and
how. IT was able to set prices to encourage services that were
cost-effective, developmental or plentiful, and discourage practices that
were consuming scarce or unavailable resources, being discontinued or that
were nonstandard. |
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To see details about the services
provided in this engagement, click on the button below: |
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Marketing IT
Services |
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