TBM Experts,
How are you allocating costs from Technical Services to Business Services. As an example:
Technical Service: Platform Service (Database)
Business Service: Recruitment (which uses such a database service offering).


------------------------------
JJ Sharma
TBM Practice Manager
KPMG Australia
------------------------------

#TBMStudio

Hi JJ,

as I learned from my Apptio teacher: it depends! Questions which can be asked are:
- is the Database solely used by the Recruitment service or is it shared with other services?
- is a usage unit available, like user, vacancy application or more technical like GB's in use?
- if it is shared, is a measurement of the usage available?

I assume it is a shared database (if not, the allocation would be a lot easier), which means there needs to be an allocation mechanism. From the books there are in general three options:
- Assumption based (good): I call it the expert guess (by a system or application administrator) who knows quite well what the usage of the different services of the database is. He/she can estimate the allocation percentages
- Attribute based (better): is there an attribute (users, vacancy applications, GB's of storage) which serves as a reliable (enough) cost driver for all services using the database?
- consumption based (best): is there a measurement of used CPU minutes or other consumption logging?

Measuring the use of a database is quite difficult, so I guess the consumption based allocation is not an option. Remains the question: do you have attribute based data available? If yes, use it to spread the database cost over the services. If the services are quite different, a more generic allocation key (most often a technical one like GB's used) is needed.
If you don't have good enough attribute data available, the assumption based percentage spread is left as the only option.

If you have allocated the cost of the Recuitment service, the next step can be to spread these costs over departments using the service (if there is more than one). Here the key can be number of users, or active number of vacancies managed, etc.

Hope this helps!



​
Original Message:
Sent: 05-05-2021 02:01
From: JJ Sharma
Subject: Cost Allocations from Technical Services to Business Services

TBM Experts,
How are you allocating costs from Technical Services to Business Services. As an example:
Technical Service: Platform Service (Database)
Business Service: Recruitment (which uses such a database service offering).


------------------------------
JJ Sharma
TBM Practice Manager
KPMG Australia
------------------------------

#TBMStudio

We used to have a repository that reported database usage per application. That was an ideal allocation key. Unfortunately, it stopped working, so we had to look for alternatives.
Eventually, we found a reference linking database servers and applications. Less ideal, but now we use the number of DB servers as the allocation key for the DB costs.
(P.S. There seems to be two threads with the same content...)

------------------------------
Regards, Guillermo
------------------------------

Original Message:
Sent: 05-06-2021 02:54
From: Peter van Loon - Partner Community User
Subject: Cost Allocations from Technical Services to Business Services

Hi JJ,

as I learned from my Apptio teacher: it depends! Questions which can be asked are:
- is the Database solely used by the Recruitment service or is it shared with other services?
- is a usage unit available, like user, vacancy application or more technical like GB's in use?
- if it is shared, is a measurement of the usage available?

I assume it is a shared database (if not, the allocation would be a lot easier), which means there needs to be an allocation mechanism. From the books there are in general three options:
- Assumption based (good): I call it the expert guess (by a system or application administrator) who knows quite well what the usage of the different services of the database is. He/she can estimate the allocation percentages
- Attribute based (better): is there an attribute (users, vacancy applications, GB's of storage) which serves as a reliable (enough) cost driver for all services using the database?
- consumption based (best): is there a measurement of used CPU minutes or other consumption logging?

Measuring the use of a database is quite difficult, so I guess the consumption based allocation is not an option. Remains the question: do you have attribute based data available? If yes, use it to spread the database cost over the services. If the services are quite different, a more generic allocation key (most often a technical one like GB's used) is needed.
If you don't have good enough attribute data available, the assumption based percentage spread is left as the only option.

If you have allocated the cost of the Recuitment service, the next step can be to spread these costs over departments using the service (if there is more than one). Here the key can be number of users, or active number of vacancies managed, etc.

Hope this helps!



​
Original Message:
Sent: 05-05-2021 02:01
From: JJ Sharma
Subject: Cost Allocations from Technical Services to Business Services

TBM Experts,
How are you allocating costs from Technical Services to Business Services. As an example:
Technical Service: Platform Service (Database)
Business Service: Recruitment (which uses such a database service offering).


------------------------------
JJ Sharma
TBM Practice Manager
KPMG Australia
------------------------------

#TBMStudio

Let's look at a simple(r) example. Say IT has 2 teams, each offers 1 specific service.

• Team 1, Service 1: Windows VM on demand (get a VM of desired spec - CPU, Memory etc...)
• Team 2, Service 2: An App Dev Platform that in turn consumes lots of Service 1 from Team 1.
• Service 1 has other consumers in the Business too.

Both Services are in the Service Catalog, and therefore at the same hierarchy in the Cost Model i.e. the "Services" Object.

Problem Statement - we want to know their respective Service TCO?

Q1: Should we allocate "cost metric" from Service 1 to Service 2? If so, from which Object to which Object?
Q2: If not, how to get the correct TCO for Service 2?

------------------------------
JJ Sharma
TBM Practice Manager
KPMG Australia
------------------------------

Original Message:
Sent: 05-05-2021 02:01
From: JJ Sharma
Subject: Cost Allocations from Technical Services to Business Services

TBM Experts,
How are you allocating costs from Technical Services to Business Services. As an example:
Technical Service: Platform Service (Database)
Business Service: Recruitment (which uses such a database service offering).


------------------------------
JJ Sharma
TBM Practice Manager
KPMG Australia
------------------------------

#TBMStudio

This is what I would do, @Jaitabh Jewel Sharma:

I have assigned an arbitrary amount of 100k to Windows VM on demand, what I call a Platform Service in the hierarchy (a new object).

Then I have App Dev Platform and Other Business Services as 'regular' Business Services.

Thus, I can fulfil your requirements: business services of different types can consume VMs.

I have not catered for other cost drivers for business services, but that would be part of the regular model. By introducing the intermediate object Platform Services you'd be able to do this-assuming that I've understood you correctly.

------------------------------
Regards, Guillermo
------------------------------

Original Message:
Sent: 05-17-2021 03:25
From: JJ Sharma
Subject: Cost Allocations from Technical Services to Business Services

Let's look at a simple(r) example. Say IT has 2 teams, each offers 1 specific service.

• Team 1, Service 1: Windows VM on demand (get a VM of desired spec - CPU, Memory etc...)
• Team 2, Service 2: An App Dev Platform that in turn consumes lots of Service 1 from Team 1.
• Service 1 has other consumers in the Business too.

Both Services are in the Service Catalog, and therefore at the same hierarchy in the Cost Model i.e. the "Services" Object.

Problem Statement - we want to know their respective Service TCO?

Q1: Should we allocate "cost metric" from Service 1 to Service 2? If so, from which Object to which Object?
Q2: If not, how to get the correct TCO for Service 2?

------------------------------
JJ Sharma
TBM Practice Manager
KPMG Australia

Original Message:
Sent: 05-05-2021 02:01
From: JJ Sharma
Subject: Cost Allocations from Technical Services to Business Services

TBM Experts,
How are you allocating costs from Technical Services to Business Services. As an example:
Technical Service: Platform Service (Database)
Business Service: Recruitment (which uses such a database service offering).


------------------------------
JJ Sharma
TBM Practice Manager
KPMG Australia
------------------------------

#TBMStudio

@Guillermo Cuadrado ... that's exactly what I had in mind ... the Services object needs to be broken into Platform Services (level 1) and Business Services (level 2), only then we can provide the TCO for both types.​

However, I'm keen to hear of any alternative approaches others have implemented for this.

------------------------------
JJ Sharma
TBM Practice Manager
KPMG Australia
------------------------------

Original Message:
Sent: 05-17-2021 09:46
From: Guillermo Cuadrado
Subject: Cost Allocations from Technical Services to Business Services

This is what I would do, @Jaitabh Jewel Sharma:

I have assigned an arbitrary amount of 100k to Windows VM on demand, what I call a Platform Service in the hierarchy (a new object).

Then I have App Dev Platform and Other Business Services as 'regular' Business Services.

Thus, I can fulfil your requirements: business services of different types can consume VMs.

I have not catered for other cost drivers for business services, but that would be part of the regular model. By introducing the intermediate object Platform Services you'd be able to do this-assuming that I've understood you correctly.

------------------------------
Regards, Guillermo

Original Message:
Sent: 05-17-2021 03:25
From: JJ Sharma
Subject: Cost Allocations from Technical Services to Business Services

Let's look at a simple(r) example. Say IT has 2 teams, each offers 1 specific service.

• Team 1, Service 1: Windows VM on demand (get a VM of desired spec - CPU, Memory etc...)
• Team 2, Service 2: An App Dev Platform that in turn consumes lots of Service 1 from Team 1.
• Service 1 has other consumers in the Business too.

Both Services are in the Service Catalog, and therefore at the same hierarchy in the Cost Model i.e. the "Services" Object.

Problem Statement - we want to know their respective Service TCO?

Q1: Should we allocate "cost metric" from Service 1 to Service 2? If so, from which Object to which Object?
Q2: If not, how to get the correct TCO for Service 2?

------------------------------
JJ Sharma
TBM Practice Manager
KPMG Australia

Original Message:
Sent: 05-05-2021 02:01
From: JJ Sharma
Subject: Cost Allocations from Technical Services to Business Services

TBM Experts,
How are you allocating costs from Technical Services to Business Services. As an example:
Technical Service: Platform Service (Database)
Business Service: Recruitment (which uses such a database service offering).


------------------------------
JJ Sharma
TBM Practice Manager
KPMG Australia
------------------------------
#TBMStudio