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An IT chargeback is the practice of charging business units for their IT usage.An IT showback is the practice of calculating the value of IT services consumed by business units without actually charging it.Chargeback vs ShowbackChargebacks are typically based on users, applications and resources such as storage and cpu hours. They are designed to highlight the value delivered by IT. Chargebacks are also used to avoid the situation where business units make excessive demands as they aren't paying the bill for their requests.
Showbacks are an alternative to chargebacks that are designed to make IT services more transparent and sell the value of IT. Chargebacks tend to be problematic as pricing models are typically invented for existing services without negotiation. As such, they can be challenged. Chargebacks may encourage business units to go to outside vendors for a discount. When business units need to cut costs, they may push IT hard to cut costs without regard to basic operational and compliance requirements.
Showbacks evolved as a way to improve perceptions of IT value creation without encouraging business to aggressively seek cuts or outsourcing.|
| IT Chargeback | IT Showback | Definition | Charging business units for their use of IT services. | Calculating the value of IT services by business unit. |
Financial Management
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