IT Success!: Towards a New Model for Information Technology

3.8. A poor to non-existent pricing model

Whoever coined the term 'there's no such thing as a free lunch' obviously never worked in or around IT. Because IT is usually centrally funded as a corporate cost centre, BUs launch projects based on expected business benefits which will accrue to them financially, yet most, if not all, of the corresponding costs will come out of the IT budget.

Figure 3.2. A well-known view of IT (Adapted from 'How Projects Really Work' located on www.projectcartoon.com, 2006 © ProjectCartoon.com. All Rights Reserved.)

Now the financial powers-that-be might be able to advance many reasons why this is so, ranging from the size of the total IT budget which requires centralization for purchasing efficiencies, to the difficulties of defining who gets what. Whatever the reasons though, they are ultimately irrelevant, because as we saw in Chapter 2, unless both the costs and the benefits apply to the client from an accounting perspective, there is really no incentive to carry out a cost–benefit analysis 'with teeth', i.e. one which can be used, not just to approve a project, but also to withhold or cancel its funding if it is not living up to expectations.

Also, as we saw in Chapter 1, even when some sort of chargeback mechanism exists (usually in the form of annual cost allocations), it rarely has the desired effect of regulating demand – and in the extreme ...