Service Based Costing Whitepaper

IT Cost Management, and its service oriented arm Service Based Costing (SBC), focus on a very specific area of IT Financial Management: the need to track, manage and understand cost end-to-end.   This whitepaper is intended to give you a better understanding of SBC and provide tools you can use to plan for SBC within your organization.

Although ITIL covers, in a fair amount of detail, a number of the building blocks required to achieve SBC – e.g., Change Management and Service Asset and Configuration Management – it really only skims the surface on IT cost management.

ITIL describes Financial Management of IT services (often referred to as IT Financial Management) as “the process responsible for managing an IT service provider’s budgeting, accounting and charging requirements”.[1]  ITIL further states that its purpose is to “secure the appropriate level of funding to design, develop and deliver services that meet the strategy of the organization”[2].  Although these statements are valid and accurate, they are very broad.  They point to having an accounting capability within IT without really getting into the heart of the matter.  General accounting may suffice to satisfy corporate accounting requirements but it’s not granular enough to allow IT to truly understand its costs.

[1] ITIL Service Strategy, 2011 Edition, TSO 2011, page 200
[2] ITIL Service Strategy, 2011 Edition, TSO 2011, page 201

About the Author

Richard Laroque

Richard LaRocque, ing. ITIL V3 Expert

Richard brings more than twenty years’ experience in business and systems consulting both as an independent consultant, and as an employee for organizations such as Andersen Consulting (now Accenture) and Provance Technologies.

Richard has worked on many enterprise engagements and developed an extensive inventory of skills in strategic and tactical IT business consulting, business and systems analysis, requirements definition, process re-engineering, functional and systems design, project management and software implementation. He has deep skills in IT Service Management (ITSM) acquired at large clients such as Bell Canada, Government of Ontario, Canada Post Corporation, Public Works and Government Services Canada, the Department of National Defence, and Industry Canada.

Richard holds an Information Technology Infrastructure Library (ITIL) V2 Service Manager certificate “with Distinction” and is an ITIL V3 Expert. He is Control Objectives for IT (COBIT 4.1) foundation certified and ISO/IEC 20 000 certified at the Consultant/Manager level. He also is a Certified Business Analysis Professional (CBAP).