I love discussions like this - it amazes me how corporate IT can think of themselves like vendors, when they typically have minimal skills in that regard.
I wrote about chargebacks a few years ago - the good and the bad... http://bit.ly/6YeInd
See also... http://bit.ly/EwsC... lots of different ways to think about the business / IT relationship
Many business units, dissatisfied with the speed, efficiency, general business savvy (and lack thereof) of the IT Department, engage external consultants and roll their own systems (the so-called shadow IT problem in many companies). A chargebacks system actually empowers those business units to spend their money externally; if I can get an invoice from internal IT, I can get an invoice from an external vendor.
The wily IT Department could/should encourage behavior such as this - if only to force a decent analysis of total delivered cost.
For example; the simplest exercise might be to compare hourly rates, external consultant vs. internal employee. Have you ever figured out your hourly rate? To keep the math simple, we'll take annual salary and divided by 2000 (40 hours per week times 50 weeks per year). Actually, let's be apply a 30% benefits load, to get a better picture of total cost to the company. Again, to keep the math simple - let's say you make $100,000 per year. ($100K/year * 1.3) / 2K hrs/year = $65 bucks an hour.
$65/hour - just try to find folks skilled at ERP implementations, DBA/data warehouse, high availability data center architecture, and/or any other sufficiently specialized vertical technology at that hourly rate... if you can, and you're near Chicago, please give me a call!
The numbers work for any area of the country; if your high-powered consultants are less than $100 an hour, then your annual salaries probably ratchet down as well. There's also a minor flaw in my over-simplifications... relatively few hard-working IT employees only work 40 hours a week!
No wonder that internal IT folks, once clued in to this apparent inequity, long to give up their corporate job and hang out a shingle of their own.
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I love discussions like this - it amazes me how corporate IT can think of themselves like vendors, when they typically have minimal skills in that regard. I wrote about chargebacks a few years ago - the good and the bad ... http://bit.ly/6YeInd
See also ... http://bit.ly/EwsC ... lots of different ways to think about the business / IT relationship
Many business units, dissatisfied with the speed, efficiency, general business savvy (and lack thereof) of the IT Department, engage external consultants and roll their own systems (the so-called shadow IT problem in many companies). A chargebacks system actually empowers those business units to spend their money externally; if I can get an invoice from internal IT, I can get an invoice from an external vendor.
The wily IT Department could/should encourage behavior such as this - if only to force a decent analysis of total delivered cost.
For example; the simplest exercise might be to compare hourly rates, external consultant vs. internal employee. Have you ever figured out your hourly rate? To keep the math simple, we'll take annual salary and divided by 2000 (40 hours per week times 50 weeks per year). Actually, let's be apply a 30% benefits load, to get a better picture of total cost to the company. Again, to keep the math simple - let's say you make $100,000 per year. ($100K/year * 1.3) / 2K hrs/year = $65 bucks an hour.
$65/hour - just try to find folks skilled at ERP implementations, DBA/data warehouse, high availability data center architecture, and/or any other sufficiently specialized vertical technology at that hourly rate ... if you can, and you're near Chicago, please give me a call!
The numbers work for any area of the country; if your high-powered consultants are less than $100 an hour, then your annual salaries probably ratchet down as well. There's also a minor flaw in my over-simplifications ... relatively few hard-working IT employees only work 40 hours a week!
No wonder that internal IT folks, once clued in to this apparent inequity, long to give up their corporate job and hang out a shingle of their own.
Internal IT has a huge cost advantage.
See Also:
Chargebacks Redux - Some Good May Come Of It
Yet Another Discussion on IT Chargebacks
Defining the Business Value of a Project
Thoughts on Why Tech Folks Need to Sweat the Administrivia Details