Tag: Best Practices

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Events Presentation Services TBM

When your world changes , how do you cope?

In Business, everything changes eventually.
If you have modeled your Service costs, there are lots of changes that require an update or change to the model.

    Things in your company/service can change:

  1. Has your company undergone a re-org?
  2. Are you using a new technology to deliver the service?
  3. Did you outsource all or part of the service?
  4. Did you change vendors? Are you changing the billing model for your customers?

    Your general philosophy toward service costing may have changed– perhaps you are maturing from a flat allocation to the business to a service consumption model.

    You may be changing tools that you use to model the Service costs. – is it time to put an automated model in place?

    Whatever the change, there is a likely impact to the actual cost of service and you will need to be able to explain why and how the service costing will change so that the business can be prepared. There is nothing worse that getting a bill and seeing a rate change in the bill for the first time.

    Recently at the ITFMA conference in Atlanta, we presented and had great discussion with the group on things to consider to rationalize and socialize a service costing change. It includes things to avoid (all of which are mistakes we have seen real customers make before we start with them) as well as things to be certain to include in your planning.

    Enjoy!

    If you are getting ready to embark on a project that impacts your services costs, please reach out to us for some deeper advice and engagement:



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Services TBM

What are your terms of Service?

Hardworking man eating at his desk I wanted to shatter one of the biggest myths about Enterprise Business Services today.

Just because you bill( or showback) a service price (cost) monthly or quarterly, that number does not have to be driven by direct consumption of that service for the previous period.

How can I say this when it seems contrary to the Holy Grail of Service Consumption tracking?

At both ITFMA and ITFM Week this month ( is there something about tax month that drives finance folks to put conferences in April?) I have heard people struggle with customers who are grumpy when a change in consumption does not impact the bottom line directly.  Inevitably, as I talked with them I found out that they had forgotten to include a term (length) of the Service.

This is so common sense, it gets overlooked.

Every month, you likely pay for at least two kinds of services at home- bills driven by monthly consumption ( your utility bills are a perfect example of this) and a bill for items with large sunk costs that are a monthly amortization of those costs and have a minimum  time commitment ( your mortgage or your car payment).  If you stop living in your house, or stop driving your car you still have to pay those monthly charges, unless you transfer ownership to someone else.

When you have an Enterprise service that requires a large sunk cost, it is OK to design it so that there is a minimum time commitment that the consumer has to make.

Of course, it is true that your Enterprise may force you to think outside the box and find a way to provide that same service WITHOUT the sunk costs so they can be more flexible, but that is a topic for another post.