Co-Engineering Business Need and IT Services

Co-Engineering Business Need and IT Services

Jay Ramanathan (Ohio State University, USA) and Rajiv Ramnath (Ohio State University, USA)
DOI: 10.4018/978-1-60566-276-3.ch006
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Abstract

Vertical traceability along the internal value chain illustrated in Figure 1 below allows us to establish a charge back system for the use of IT services. In addition the fine-grain Interaction approach to implementing chargeback also encourages the discipline needed for other initiatives like capacity management, audit procedures, and aligning of IT investments with business needs. How to achieve this alignment is the subject of this chapter.
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Introduction

Why is a good chargeback model important for the effective organization?

  • How is the chargeback model developed based on the BioS work products?

  • How are chargeback and capacity management related?

  • Why is a good chargeback model closely tied to retaining flexibility, effectiveness, service-level management, and a tool for customer-oriented management and visibility?

Today’s enterprise must maintain a diverse portfolio of IT applications to support critical business Interactions and drive the processes responsible for the day-to-day operations and management of internal and external business services. At the same time there is a need to manage the total cost of ownership, reduce overall complexity of the IT assets, and properly align and control capacity. The ability to do so is directly related to several factors: (Figure 1)

Figure 1.

ACE structure and associated capacity work products

  • Aligning infrastructure Agent capacity to business need,

  • Charging for IT services based on the services delivered, and

  • Expanding service capacity based on demonstrated need.

In addition, financial management has become an item of highest priority within organizations due to recent events like the bursting of the high-tech bubble, global economic slowdown, and scandals. This has also resulted in mandatory compliance requirements due to the Sarbanes-Oxley (USA), Basel II (Europe), and AS8015 (Australia). As a result IT expenditures are increasingly scrutinized.

One result of all this is that the justifying, directing, and controlling IT expenditure through ‘chargeback’ to customer organizations within the enterprise is becoming increasingly important. Another result is the understanding that chargeback is a key governance mechanism for an adaptive organization as it allows the IT infrastructure roles and their capacity to evolve more directly to meet business priorities.

Finally, service chargeback mechanisms have the ability to influence the behavior of service consumers but these mechanisms also have the capability to increase understanding between consumers and providers and enable more effective joint decision making. Ross (Ross 99) explores the impact IT chargeback has from a sample of large organizations that have established chargeback practices. The findings suggest that chargeback is, at least to some degree, a useful tool for strengthening the IT-Business relationship because it increases and promotes mutual understanding and problem solving. A cornerstone of the co-engineering approach is to build relationships that allow this style of valuable communication and joint decision making possible and the article shows that chargeback is one such mechanisms that can be used to build up a solid foundation for collaborative engineering practices.

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The Business Challenge

An example of a typical as-is chargeback policy for the use of capacity and internal services has three aspects as follows.

Allocation of Capacity: During the budgeting process each customer organization within the enterprise is allocated certain percentages of Agent capacity. In the as-is scenarios this is typically based on based on history rather than actual use in most cases because the traceability is missing within the organization. This is often because the needed reporting and monitoring is not in plane or too cumbersome. For example, a department might be allocated ten months of a specific Agent / programmer, even if the projected and actual use might be two months.

Cost Identification: Typical sources of costs utilized for the chargeback within the organization include:

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Table of Contents
Acknowledgment
Jay Ramanathan, Rajiv Ramnath
Chapter 1
Jay Ramanathan, Rajiv Ramnath
We begin with a characterization of service challenges and a conceptualization of a complex service enterprise as a collection of organizations and... Sample PDF
Characterization of Service Orientation and the Adaptive Complex Enterprise
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Chapter 2
Jay Ramanathan, Rajiv Ramnath
The ACE structure for coordination across various services using policies to meet overall goals is presented here. The more detailed depiction of... Sample PDF
Adaptive Complex Enterprise Framework: Ontology, Modeling, Co-Engineering Principles, Work Products
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Chapter 3
Jay Ramanathan, Rajiv Ramnath
Governance and related alignment methods for the management of complex systems are introduced here to facilitate and better decision making. The... Sample PDF
Governance and Conceptual, Logical and Installed Architecture Alignment Using Work Products and Workflow
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Chapter 4
Jay Ramanathan, Rajiv Ramnath
The knowledge infrastructure for enterprise architecture presented here has a taxonomy of useful patterns and pattern applications illustrated in... Sample PDF
EA Knowledge for ACE Deployment
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Chapter 5
Jay Ramanathan, Rajiv Ramnath
Organizations like the City are pressured to be more and more service oriented with fewer resources. The City has an expanding service area... Sample PDF
Strategic Improvement of Non-Routine Services
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Chapter 6
Jay Ramanathan, Rajiv Ramnath
Vertical traceability along the internal value chain illustrated in Figure 1 below allows us to establish a charge back system for the use of IT... Sample PDF
Co-Engineering Business Need and IT Services
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Chapter 7
Jay Ramanathan, Rajiv Ramnath
The ACE structure is not only used to create BioS goals and work products, but also to perform the analysis needed to prioritize improvement... Sample PDF
Co-Engineering IT Services for Lean Operations
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Chapter 8
Jay Ramanathan, Rajiv Ramnath
There is consensus that explicit knowledge is information. In addition there is tacit knowledge that exists in the human minds. Tacit knowledge is... Sample PDF
Management, Monitoring, and Mining of Service Knowledge
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Chapter 9
Jay Ramanathan, Rajiv Ramnath
We explore how different types of opportunities for Interaction improvement - innovation, effectiveness, and resilience can be identified. Our goal... Sample PDF
Relating IT to Service Innovation
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Chapter 10
Jay Ramanathan, Rajiv Ramnath
The Adaptive Complex Enterprise framework presented provides a basis for integrating many related areas of research into a services discipline. We... Sample PDF
Research Topics in Complex Systems
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Appendix
Jay Ramanathan, Rajiv Ramnath
About the Authors