Cost per business unit showback is a financial practice where the costs associated with IT services or infrastructure are allocated to specific business units within an organization. It involves providing cost transparency to business units, showing them the breakdown of expenses they incur based on their usage of IT resources. This enables business units to understand their IT expenditure and make informed decisions regarding resource allocation and optimization. Here are a few examples to illustrate cost per business unit showback:
- Cloud Services: Suppose an organization utilizes a cloud service provider like Amazon Web Services (AWS) to host various applications and services. The cost per business unit showback would involve breaking down the expenses incurred by each business unit based on their usage of cloud resources. For instance, if Business Unit A heavily utilizes AWS EC2 instances and S3 storage, they would be allocated a higher portion of the total cloud costs compared to Business Unit B, which may have limited cloud resource usage.
- Data Center Costs: In a large organization with multiple data centers, the cost per business unit showback can be applied to allocate the expenses associated with data center operations. Each business unit would be assigned a portion of the costs based on factors such as their physical space utilization, power consumption, cooling requirements, and network bandwidth usage. This allows business units to understand their contribution to overall data center costs.
- Software Licensing: Software licenses can be a significant expense for organizations. By implementing cost per business unit showback, the costs of software licenses can be allocated based on the specific applications or tools used by each business unit. For example, if Business Unit C heavily relies on a specific enterprise software solution, they would bear a larger portion of the licensing costs compared to other units that use different software or have lower usage levels.
- Network Infrastructure: Organizations often have complex network infrastructures that connect various business units and departments. Cost per business unit showback can be used to allocate the costs associated with network equipment, bandwidth, and maintenance. Business units that require higher network capacity or have specialized networking needs would be assigned a larger portion of the network infrastructure costs.
- Support Services: IT support services, such as help desk support or infrastructure maintenance, can be allocated using cost per business unit showback. Each business unit would be assigned a portion of the support services costs based on factors like the number of support tickets raised, the complexity of systems supported, or the level of dedicated support staff required.
Implementing cost per business unit showback allows organizations to promote accountability and cost-consciousness among business units. It helps business leaders understand the true costs of their IT services and encourages them to optimize resource usage and explore cost-saving opportunities.
