The Winchester Services Group

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Success Story - Marketing IT Services

 

 

  Client:  High Tech Manufacturer  
   
  Project:  Effective Pricing of IT Services
   
   
 

 

 

 
  Situation:   
     
  One of the country's largetst high tech manufacturers had recently merged with a major competitor in a multibillion dollar acquisition.  After many of the initial issues were resolved, IT noted that the approach to charging for IT services, which had varied significantly between the two companies, was ineffective, inappropriate, incomprehensible and ignored by most consumers of IT services.
   
  Approach
  A major initiative was launched by IT leadership to assess and revitalize the mechanisms used to price IT services.  The objectives of the initiative included fairness, uniformity, understandability and relevance.

After several months of study, data collection, exploration and consulting with experts, the team assigned to the initiative identified four cost-recovery methods that would be implemented:

   
Personal -- Services requested and used by individuals such as cell phones, e-mail and calling cards.  Individuals charged for services on a fixed-price basis for actual services consumed.
Contracted -- Services requested of central IT by a business unit such as software development or infrastructure usage. Business units charged for services on standard price basis for actual units consumed.
Allocated -- Services provided to multiple business units where costs cannot be measured.  Costs are budgeted annually and charged back quarterly based on an accounting allocation method such as employees, revenue or number of servers.
    Tax -- Undistributed costs incurred by central IT recovered through G&A.
  Results
   
  The implemented methods allowed business units and individuals to understand what the IT line item costs that appeared on their P&Ls were for, which costs they were able to control and how.  IT was able to set prices to encourage services that were cost-effective, developmental or plentiful, and discourage practices that were consuming scarce or unavailable resources, being discontinued or that were nonstandard.

 

To see details about the services provided in this engagement, click on the button below:
  Marketing IT Services

 

 

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