Earlier this year I wrote a post listing some of the pros and cons of using a chargeback system, in which business units are charged for the IT services they consume.
Those in favor of chargebacks say it makes IT costs more transparent, in theory giving business units an incentive to reduce them, and it helps companies get a more accurate handle on their IT costs. Some experts I cited in my post also felt chargebacks created a better relationship between IT and business units, although others disagreed, believing it creates an adversarial relationship between the two.
Some folks think chargeback reinforces the idea of IT as a cost to be controlled rather than a provider of business value, and one expert cited in my post said chargeback encourages managers to focus on departmental efficiency rather than overall corporate goals.
1-800-Flowers CIO Steve Bozzo seemingly found a way to enjoy the positives of chargebacks without introducing a full-fledged chargeback system. As described on The Accidental Successful CIO blog, Bozzo installed software that helped him track IT costs for the each of the company's brands and then sent business heads "bills" that showed what they would pay for IT services if they were being charged for them.
While the business executives didn't actually have to give up any funds, they got a clear picture of how much money was being spent and where it was going. It introduced the idea of demand management and exposed wasteful spending patterns, thus helping business units identify areas for potential savings.