Conclusion: One of the dilemmas facing senior managers is whether to allocate IT expenses to a service type or absorb them as a corporate overhead. The problem is compounded when a direct expense, attributable to Cost of Sales for a service or product, is involved. If it is absorbed as a corporate overhead unit costs needed to determine pricing will be hard to identify.

When issues, such as the one above arise, managers have to wrestle with options for chargeback systems for IT services and whether the effort is justified. There is no right or wrong answer, only the preferred option.

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Alan Hansell

About The Advisor

Alan Hansell

Alan Hansell is an emeritus IBRS advisor who focused on IT and business management. Alan specialised in critiquing and commenting on IT and business management trends, ways to justify and maximise the benefits from IT-related investment, IS management development and the role of the CIO. Alan has extensive experience in IT management, consulting and advising senior managers in matters related to IT investment. He was a Director in Gartner's Executive program and adviser to over 50 CIOs and business managers and before joining Gartner a consultant with DMR Group. He also worked as an IS professional, manager and industry consultant for IBM for nearly 30 years. Alan is a CPA and Associate of Governance Institute of Australia.