Seems like the good old discussion about chargeback vs. showback has come to life again. Several esteemed writers have recently touched on this subject.

Well truth needs to be told, the majority of companies still don’t perform full billing and chargeback for IT services. Statements like “We tried it but the hassle was not worth the benefits“ are still heard in IT corridors and conference rooms. That said, Chargeback is definitely getting some back wind recently and more and more companies are considering doing full chargeback. This is driven by the move to centralized shared IT and the growing adoption of shared virtualized resources, in which case you must breakdown cost by usage.

Also the growing awareness of running IT in a cost effective manner is driving organizations to empower BU’S to take responsibility over their IT spend by performing chargebacks. Here comes into play a method that seems to be very popular recently as well, show back, a lightweight, less formal version of chargeback. This method is the process of showing BU’s and P&L’s what was the actual IT spend of their organization but not actually charging back. This is much easier to achieve as you don’t need to deal with setting a price/ rate list, which chargeback requires.

Personally, I find that the difference between companies who perform chargeback and those who just do show back is less a matter of taste and choice but more a function of the business structure. Companies who are divided into multiple legal entities and P&L’s will usually do full chargeback. They simply need to for tax and regulatory purposes. Companies who have a simpler structure will stick with show back as a method for behavior changing.