Another old idea is rediscovered . . .

Tracking Costs

Conrad Weisert, 2 June 2011
©2011, Information Disciplines, Inc.

NOTE: This article may be reproduced and circulated freely, as long as the copyright credit is included.


"For the past few years IT has been under pressure to evolve and become a service provider for the enterprise instead of being a cost center.   This means tracking business units' usage of IT resources, including labor, hardware, software, power, and cooling."

Computerworld, May 9, 2011, p. 34

Is that something new?

"For the past few years"? The reporter may believe she has discovered a new business practice, and she wants to tell us about it. I suppose that's not surprising. I've run into several people who came to information technology in the desktop era and who never heard of accounting and chargeback for services. I've read textbooks on operating systems that never mentioned resource billing.

Yes, there were some organizations, usually small companies, that chose not to bill for either equipment usage or professional personnel time. But most businesslike larger computer centers and software development organizations have been charging users, external companies or internal departments, for their services for a half century. Such chargeback assures that:

Shared-resource complications

On early large-scale computers that ran one job at a time it was easy to account for machine use: The operator (or the computer itself if it had an internal clock) noted the start and stop time of each job. The user organization got a bill at the end of the month.

When multiprogrammed operating systems became common in the mid-1960s that didn't work any more. A 5-minute job might be active for over an hour, due to competition for CPU time and peripheral devices. Resource accounting algorithms in multiprogrammed systems was a complicated problem that IT people and operating system vendors argued over for a decade or so, but they eventually settled on formulas that were both fair and understandable.

Personnel time

Accounting for people—programmers, consultants, systems analysts—was comparatively easy. Each staff member kept a time sheet (paper or computerized) and logged the jobs he or she was working on through the day. That was essential, of course, for tracking the cost of developing custom applications, comparing actual cost with the estimates used in justifying a project.


Last modified 2 June 2011

Return to IDI home page
Management articles