Stuck with charge-backs, but not necessarily drawbacks

Charging back for IT services allows business leaders to duck some leadership responsibilities -- namely, making hard choices

Dear Bob ...

You've written quite a lot about how undesirable charge-backs are, and I agree with you. Every company I've worked in that has instituted them has become more political, more siloed, and less driven by strategic decision-making.

[ Also on InfoWorld: When does running IT as a business make sense? | Get sage advice on IT careers and management from Bob Lewis in InfoWorld's Advice Line newsletter. ]

I recently joined a company that competes for and wins large service contracts, most of which include very specific contractual provisions that require us to charge back for IT services.

What do I do now?

- Grudging Charge-backer

Dear Grudging ...

You charge back.

The problem with charge-backs isn't in the transfer of funds themselves. The problem resides in the reasoning that usually underlies the practice: That by turning IT into a separate business selling its wares to corporate customers, IT supply and demand will be automatically balanced and we'll all live happily ever after in the wonderful world of self-regulating marketplaces.

It's one of those ideas that looks great until you inspect its tenets, starting with the assumption that a business ought to look like a marketplace.

That's utter nonsense. Marketplaces are spaces where multiple customers bidding for services and competing suppliers that sell them come together. Any company that willingly turns its executives into a mishmash like this deserves to fail, and inevitably will. Successful companies are called "organizations" for a reason -- they are organized to accomplish a shared, clear purpose.

If the issue isn't clear, imagine for a moment that your pancreas, spleen, and liver competed with each other for red blood cells, and whichever was able to give the heart the most ATP got the most blood in return.

That's no way to run a physiology. Or a company.

[ Looking for the better alternatives? You'll find them in Bob Lewis's latest book, "Keep the Joint Running: A Manifesto for 21st Century Information Technology." ]

If you have to charge back, the main challenge you face is preventing it from becoming anything more than an accounting procedure. So long as your company's executive leaders continue to lead and to make the company's decision regarding where and how to invest its time, effort, and capital instead of using charge-backs as the primary means of governance, you'll be fine.

- Bob


Copyright © 2009 IDG Communications, Inc.

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