Instead of showing a cost, for example, under the general ledger heading ‘staff costs’ (perhaps broken down by grade), the figures would show what those staff actually deliver. This is a step beyond attributing costs to tasks/activities and suggests instead that service providers should be looking to attribute costs to actual deliverables and services. This can be done at various different levels of granularity.
A high level breakdown that shows headings such as infrastructure services, applications development, user support etc is more helpful than a basic staffing figure but it still does not really link to strategic aims or allow internal customers to engage in a debate about priorities.
Moreover, since headings at this level are all probably essential activities, the discussion is again likely to be around continuing the activities with squeezed resource rather than identifying non-value added activities that could be stopped altogether.
Breaking this down further into specific ‘products’ will inevitably involve more work but this is where you start to provide the kind of information that can be used for a meaningful discussion about priorities. Such ‘products’ would include systems and processes already supported and developments requested by customers. If not handled carefully this can turn into the kind of internal recharging that becomes a cottage industry in itself – the challenge is to find a model that gives an appropriate level of granularity without becoming an overhead that ceases to add value.
As a start point you may want to budget in this way based on estimates then find the most appropriate way of gathering the data you need to refine and validate the model. It is at this point you can begin to debate the fact that certain planned developments may require extra resource or that certain systems or processes consume resource that does not appear commensurate with their value to the organisation.
There are some excellent examples of IT services delivering efficiencies but, until users have an understanding of reasonable service costs and we can shift the focus of discussion from cutting costs to delivering value, we will continue to find ourselves on the treadmill of doing more for less and finding that simply running faster does not help.
"… IT has driven some real efficiencies … We need to celebrate and publicise our successes more."
Sexton, C. 2011 IT and efficiency
"The thinking is short term – longer term thinking needs to be developed. Not ‘is it within budget’ but ‘what benefit will this deliver the institution"
Tinson, P.2011 Value for money - the leadership challenges
"Activity accounting provides a natural framework to assign value. Where are we adding value? Where are we not adding value? Where should we be adding value? How well are we adding value?"