4 key IT Costing Design Principles

1. Reflect, don’t invent
A Cost Allocation Methodology is only meant to reflect the organisation’s operating model, IT architecture, products and services. So, begin with understanding the organisation.

2. Stick to the natural order and industry standards where meaningful
IT Services have a natural order to how they are ‘put together’. The ‘Infrastructure’ layer of the Cost Model should reflect this natural order. Also, the structure of the IT Stack should and terminology should follow industry standards as much as possible.

3. Direct where possible
Where costs can be directly attributed to an IT Service, this line-of-sight should be maintained. Not only are cost of Services more accurate, the additional benefit is that Service Owners and Business Owners understand that they are more in control of the costbase.

4. Align Allocations to how costs are charged
Vendors typically follow a charging methodology. Aligning the allocation methodology to this charging methodology allows the end-user to more directly control and influence the cost of the Service.