IT Showback

IT Showback vs. Chargeback

Here’s how IT showback differs from IT chargeback:

IT Showback:

• Purpose: The purpose is to make individual departments aware of their usage of IT resources and the associated costs.

• Financial Impact or cost attribution: No billing is involved to make the departments aware and conscious of their usage.

• Behavioral Influence: encourages departments to monitor and optimize their IT usage without financial repercussions carefully.

• Flexibility: IT showback is an informal or more flexible approach to cost allocation used in smaller organizations. 

IT Chargeback:

• Purpose: Chargeback is used to track the usage of IT resources across departments and allocate costs based on their actual usage.

• Financial Impact or cost attribution: Departments are billed for their IT usage.

• Behavioral Influence: It motivates departments to take financial accountability and optimize their IT consumption without hampering work.

• Flexibility: IT chargeback is a more formal approach for recovering costs.

Table: Key Differences Between IT Showback and IT Chargeback

Purpose of IT Showback

IT showback has several strategic purposes in an organization:

• Improved Cost Management: It gives a glimpse into IT usage and spending, making it easier for departments to see how and where the resources are used.

• Promotes Accountability: IT showback encourages responsible consumption of resources without enforcing any financial consequences.

• Better Decision Making: The insights on resource usage and costs help leaders make better data-driven decisions to optimize costs.

• Improves Collaboration: It allows IT managers to collaborate with other departments and discover opportunities for better resource usage and cost allocation.

How does IT Showback Benefit IT Managers?

Here are the primary benefits of IT showback for IT managers:

Cost Transparency

• IT showback helps managers get a detailed breakdown of expenses by department, service, or resources.

• This transparency can further enable IT managers to make data-driven decisions towards cost optimization.

Example:

Let’s say a company using AWS sees a sudden rise in cloud expenses. IT managers, using IT showback, identify the department that is overspending or using extra resources. After the identification, they reduce unnecessary resource usage and thus reduce costs.

Better Budget Management

• Based on the reports, IT managers can understand resource usage better and allocate more accurate and realistic budgets.

• By sharing the costs with the respective departments, IT showback can help influence spending behavior and encourage optimal resource use.

Example:

A company’s marketing and software development teams use cloud resources and have the same budget allocation. Using showback, an IT manager can show both departments the resource usage and associated costs. The showback report might indicate that the marketing department is overspending and can manage tasks at a significantly lower budget by making a few optimizations. This can help reduce unnecessary expenditures and promote efficient use of resources.

Performance Evaluation

Using IT showback, you can understand the value and performance of different IT resources, enabling you to identify any underutilized or expensive services.

This can help IT managers optimize resource allocation by ensuring that the necessary resources get optimal funding and that underperforming services are removed.

Example:

An IT manager in a media company finds high costs associated with a cloud-based tool. Using IT showback, the manager can identify underutilized services and recommend alternatives or optimizations, like running services during business hours only. This can help enhance resource efficiency without impacting daily operations.

Challenges with IT Showback Implementation

Here are some common challenges associated with IT showback and potential solutions:

1. Data Collection and Accuracy

As different departments use tracking methods and diverse systems, gathering data accurately becomes more challenging. Inconsistent data collection can lead to inaccurate show-back reports, rendering the process useless.

Solutions

• Unified Monitoring System: Establish a unified monitoring system to streamline the data collection process across departments.

• Standardization: To ensure data consistency, create a set of rules or a framework to standardize tagging and reporting processes in every department.

• Automation: This involves using technology to eliminate human intervention during data collection to minimize errors.

2. Organizational Buy-In

Departments might consider show back as a mechanism for increased monitoring, creating resistance to its adoption.

Solutions:

• Clear Communication: Communicate the benefits of IT show back, emphasizing its role in improving transparency and cost efficiency. Also, make sure to convey that there is no billing involved, as there is in IT chargeback.

• Training: Conduct training sessions and involve department heads to help them understand how showback can be leveraged to optimize costs and allocate assets more efficiently.

• Reward: Reward departments that manage resources efficiently, creating a positive culture around the initiative.

3. Complexity of Implementation

Implementing IT showback requires the involvement of the finance department, IT department, and other business units. Creating tracking systems, defining user metrics, and producing and analyzing reports can become challenging.

Solutions:

• Phased Implementation: Implement showcase in selective departments before opting for a full-scale implementation. Learn from your mistakes and improve.

• Leverage Automation: Use tools to automate processes to reduce manual intervention and, thus, margin for errors.

• Foster Collaboration: bring department heads from all business units, including finance, to define clear metrics and streamline processes.

Technology in Support of IT Showback

Tools and Platforms

To use IT showback correctly, there has to be a strong technology stack in place. Critical tools include:

• IT Service Management (ITSM) Platforms:

• ServiceNow: This application is one of the leading IT Service Management Platforms and offers ITIL processes, including self-service portal, asset management, and reporting modules.

• Atlassian Jira Service Management: The solution provides customized workflows and the ability for third-party applications to integrate.

• Cloud Cost Management Tools:

  • AWS Cost Explorer: This tool allows you to examine AWS bills and how much an organization spends for using its services.

  • Azure Cost Management: This tool gives the organization information on Azure costs.

  • Google Cloud Billing: This shows the cost of the goods and services acquired by using Google Cloud.

• Data Analytics and Visualization Software:

  • Tableau: This tool allows end users to create dashboards and visualize data interactively.

  • Microsoft Power BI: Enables users to connect from different data sources for data embedded and analytics.

  • Splunk: This toolset is an expert in analytics on machine data covering IT operational needs.

• Mobile Device Management (MDM) Solutions:

  • Apple Business Manager: This tool provides the capability of running Apple Devices inside an organization.

  • Windows Autopilot: Saves time in device configuration and provision.

Role of Data Analytics

Data analytics can significantly enhance the effectiveness of IT showback. Here’s how:

• Trend Analysis: Data analytics tools can process large volumes of data to identify trends and issues in resource utilization. This can further help you understand how different departments use resources.

• Cost Allocation: IT managers can leverage analytics to determine how much resources each department uses. Based on this information, adequate budgets can be allocated.

• Optimization: Data analytics tools can provide actionable insights for optimizing costs and resource usage.

How to Implement IT Showback in Your Organization?

Here are the steps you need to follow for IT showback implementation in your organization:

1. Define Clear Objectives

• Goal Setting: Define your aim; do you want to reduce costs, improve transparency, or offer better value and allocation of resources?

• Integration: Concepts should be well-melded with the business goals of the organization.

2. Evaluate Existing Resources

• Inventory Tools: Gather and evaluate existing systems and tools that are likely to promote showback.

• Data Available: Assess the available data and how useful they can be.

• Team Readiness: Analyze the level of your IT staff in terms of skills and capacity to carry out the implementation

3. Determine the Right Tools

• Pick Platforms: Evaluate the tools available that go hand in hand with your existing setup.

• Scalability: The tools should fit the organization and, more importantly, grow with the organization.

• Vendor Support: Assess the kind and amount of assistance and training the vendor offers.

4. Develop a Data Collection Framework

• Standardize Metrics: Create a definition for metrics that can measure IT effectiveness.

• Automation: Create solutions that will reduce the need for manual data capture where reasonable.

• Data Governance: Create rules to ensure correct, confidential, and well-protected information.

5. Create Reporting Mechanisms

• Design Reports: Design the reports according to the target audience's preferences.

• Visualization: Graphs and dashboards can be used to present data comprehensibly.

• Frequency: Identify the timeliness of the report and the intended receivers.

6. Pilot the Program

• Start Small: Start by introducing showback in one department or for one or two services.

• Gather Feedback: Seek opinions from the system users to improve the approach.

• Measure Results: Evaluate changed behavior and economics resulting from the intervention.

7. Communicate and Educate

• Training Sessions: Organize training seminars or disseminate documents to explain showback reports.

• Open Dialogue: Instead of answering questions, discourage discussions to get acceptance.

• Highlight Benefits: Demonstrate successful implementation results and other outcomes of the pilot.

8. Gather Feedback and Iterate

• Continuous Improvement: Always use feedback to improve processes and reports.

• Scalability Planning: Start planning to implement showback in other departments or services.

• Monitor Impact: Continuously evaluate the effect of showback on behavioral change and economic efficiency.

IT Showback Implementation Best Practices

Here are the IT showback best practices to keep in mind:

1. Ensure Data Accuracy

• Regular Audits: Occasionally, check the data to validate trust.

• Completion Error Handling: Include correction procedures to eliminate inaccuracies.

2. Tailor-Made Reports

• Simplicity: Avoid technical language must be avoided

• Substantiality: Information covered in the report must interest the target audience.

• Target Audience: Reports can be customized for different target audiences, such as the CEO, executive directors, or department managers.

3. Cultivate Openness

• Methodology: Explain straightforwardly what was done throughout the data collection and calculation process.

• Report to Report: Ensure that the documents needed are easy to obtain.

• Engagement: Create the possibility for stakeholders to raise their concerns.

4. Be on the Same Page

• Strategic Integration: Link intra-company billing figures to performance metrics.

• Consistent Evaluation: Ensure that showback working plans are adjusted to the current interests of the corporation.

5. Integration Enhancement

• Multidisciplinary Teams: Create teams that include staff from different divisions.

• Focus on the End Users: Concentrate on what the end users of the information systems look for rather than their particular departments.

Wrapping Up

In today’s business environment that revolves primarily around technology and the associated costs, IT Showback is a game changer for IT managers. If implemented in the right manager, IT showback can help IT managers:

• Identify cost-saving opportunities

• Ensure effective resource utilization

• Improve budgeting

• Boost cross-departmental 

• collaboration

Note. If you lack the expertise, resources, or time to implement IT showback, hiring experts is always good.

FAQs

Q1: Is IT Showback applicable in all organizations, irrespective of their size?

While IT showback applies to all organizations, it’s typically used in smaller organizations to help IT managers gain visibility into resource usage and create cost awareness across departments. 

Q2: What behavioral changes is IT Showback likely to bring to an employee?

IT showback may lead to employees becoming more aware and responsible about using IT resources. They may reduce unnecessary usage, leading to major cost savings for the organization.

Q3: Will implementing IT Showback cause issues between IT and other departments?

While this can be possible, you can avoid any resentment among employees by making them aware of the long-term benefits of IT showback.

Q4: How often should I generate showback reports?

This varies based on the organization’s goals. Some organizations may want to generate showback reports every month, while others may want to do it every three months.