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.