Finding the right scope for your chargeback strategy
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This document outlines the importance of a well-defined chargeback strategy for IT within organizations, emphasizing how it can enhance financial clarity and drive alignment with business objectives. It details the critical components needed to design, implement, and manage such a strategy, including understanding costs, roles, and fostering a culture of accountability. Additionally, it highlights the significance of engaging various stakeholders to improve efficiency and ensure value delivery throughout a project's lifecycle.
Finding the right scope for your chargeback strategy
- 1. Finding the right scope for your chargebackFinding the right scope for your chargeback strategystrategy Steve Anderson IT Partner, EMEA Davis Langdon LLP
- 2. STEVE ANDERSON Over 15 years working in IT Held in a variety of technical roles before rising into management – currently studying for my MBA Worked across many sectors including engineering, manufacturing, transport, retail, high-tech, management consultancy, finance, construction and business services A ‘turn-around’ CIO
- 3. WHAT WE ARE Davis Langdon is a multi disciplinary firm of client focused specialists, highly experienced in all areas of the built environment, with an in-depth knowledge of procurement, development, finance and construction delivery processes.
- 4. WHERE WE ARE Davis Langdon are established in all major economic clusters, nationally and internationally QATAR DUBAI BAHRAIN LEBANON BRUNEI CHINA HONG KONG MALAYSIA PHILIPPINES SINGAPORE THAILAND VIETNAM AUSTRALIA NEW ZEALAND SOUTH AFRICA BOTSWA NA USA SPAIN POLAND FRANCE ENGLAND SCOTLAND WALES EGYPT KOREA WEST AFRICA EAST AFRICA IRELAND CZECH REPUBLIC Global reachGlobal reach Local deliveryLocal delivery Europe/ Middle East Offices: 33 Staff: 1350 Asia Pacific Offices: 18 Staff: 960 Australasia Offices: 13 Staff: 170 Africa Offices: 14 Staff: 160 USA Offices: 6 Staff: 60
- 5. Risk appraisals/due diligence Feasibility studies Funding advice Property tax planning Strategic advice on design economics Development strategy Affect decision to build Affect viability Design specifications/co-ordination Development/time/cost planning Value engineering and risk reviews Procurement strategies/management Tender and contract administration “TIMING” - STRATEGIC ADVICE AND SERVICES AT CRITICAL STAGES OF A PROJECT EARLY STAGE ADVICE PRE-CONTRACT
- 6. Post Project audit Productivity/energy/efficiency studies Facilities/repair/refurbishment/management Change consultancy Programme management Financial administration/project monitoring Change management Progress reporting Agreement of final costs Construction: Occupation interface Affect return on investment Affect productivity/ running / owning costs “TIMING” - STRATEGIC ADVICE AND SERVICES AT CRITICAL STAGES OF A PROJECT CONSTRUCTION OCCUPATION
- 7. * Specification Consulting * Environmental and Energy Studies * Property Taxation Advice * International Cost Comparisons * Construction Market Studies * Legal Support Services EARLY STAGE | OCCUPATION| PRE-CONTRACT | CONSTRUCTION CONSULTANCY SERVICES * We also provide value added consultancy and specialist services throughout a project’s life cycle: “TIMING” - STRATEGIC ADVICE AND SERVICES AT CRITICAL STAGES OF A PROJECT
- 8. DAVIS LANGDON ENVIRONMENT Flat structure – c. 30 cost centres (office & SBU) High degrees of autonomy Office domains Net profits = net drawings ‘Loose’ policies – influence and persuade Low value from Central Services (HR, Finance, IT) Duplicated services locally Increasing investments in IT Cost avoidance
- 9. HISTORY OF CHARGEBACKS Borne in days of the mainframe Commoditisation led to devolution Crisis of control Centralisation solution Evolution of corporate IT Increasing economic cost pressures Demand for ‘value for money’ from IT Technological sophistication
- 10. KEY ELEMENTS Why? Why does you need a chargeback strategy? What? What do you include/exclude in the chargeback strategy? How? How are you going to design, implement and manage your chargeback strategy?
- 11. WHY? Partner cost focus – net profit = personal drawings Complaints about current re-charges Unclear role of IT – engage and educate Benchmark service/cost against market Commitment to service – reveal nature of costs Consumer preference – ‘pay as you go’ Convert fixed costs to variable costs ‘Open bar’ to ‘cash bar’ – increased IT governance Run IT like a business – must add perceived value
- 12. WHAT ? DepreciationDepreciation ExternalExternal servicesservices Support andSupport and MaintenanceMaintenance DepartmentDepartment overheadsoverheads Staff costsStaff costs Operations staff/Development staff/Management & Admin staff Training/travel/stationery/office costs/legal expenses Hardware support and consumables/Software support and licensing Voice network/mobile phones/wide-area network/firewall management Hardware and software purchases (capitalised) Major projects (capitalised)
- 13. HOW ? IT led (not Finance) – service integration Utilisation – asset tracking and management Education – detailed monthly statements Value – account management Individual/Office/Business Unit/Enterprise costs Apportionment method – capita/revenue/profit Build your own model Desired behaviours & demands Company culture & maturity Relate IT costs to business value
- 14. DEVELOPMENT PROJECTS Development staff costs are problematic New approach required – demand driven Development proposals – commercial model Increased agility and responsiveness ‘Demand driven’ not ‘resource led’ Business unit ownership and valuation Income potential – reduce IT expenditure Relate IT investment to business value
- 15. BENEFIT S Business units have more information and can operate more intelligently and autonomously – they are educated and empowered to challenge Internal overhead departments see this as an opportunity to evolve and align with the business – change from focus on cutting costs to value creation Increased utilisation of IT and demand for greater levels of performance
- 16. SUMMARY An appropriate chargeback strategy is essential Ensure it is aligned with business needs and culture Focus on encouraging the desired behaviours in Finance department Business users IT department Not just about IT cost recovery Drives greater alignment Improved efficiency Value delivery
- 17. QuestionsQuestions Steve Anderson – IT Partner EMEA, Davis Langdon LLP steve.anderson@davislangdon.com