It’s been a while since I’ve put pen to paper and written here, but there’s a hugely interesting article on The Daily WTF (here) about Internal Billing and about what IT should mean to an organisation.
Internal Billing and Internal Cost Centres builds empires – I once worked with an organisation in which departments, despite having an inhouse print shop, would do their own bulk printing on desktop laser printers. Why? Because the print shop charged them per sheet, but toner cartridges were centrally funded. To that empire (the department) the cost per sheet was less, but to the overall bottom line the cost was significantly higher. It was a totally utterly flawed situation – departmental focus had shifted to their own finances, not the finances of the wider organisation despite the higher cost.
This doesn’t really happen in SMEs, but as organisations get larger empires build. Remy is right in this article – it becomes a toxic client/vendor relationship taking place inside the organisation. You’re not just at war with your competitors, you’re now at war with your colleagues too.
If you’re a CFO, and you’re facing this – think of the damage it’s doing. Your own staff, occupying your floor space, in your heated building are suddenly more expensive to an internal budget (but cheaper to the whole organisation) than an external supplier. But to the manager of the widgets department, he’s saved money, whilst costing the company significantly more overall – but he’s laughing all the way to the bank. Every modern business is an IT business from the smallest SME to the largest corporation.
I’ve long believed that the only way to make any company achieve its best is to align the goals across the organisation. The moment that the manager of the widgets department is aligned against his own cost centre, it’s all gone horribly wrong. I can think of several clients over the last few years where we’ve turned a cost centre into a profit centre – but you’ll never achieve that with bat-shit crazy internal markets.
If you’re looking for IT to achieve a positive impact on the bottom line, get in touch for a chat – we’ll even buy the coffee 🙂
Kyle Williamson is Technical Director at Verstech Limited.