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Finding the right scope for your chargeback Finding the right scope for your chargeback strategystrategy
Steve Anderson
IT Partner, EMEA
Davis Langdon LLP
STEVE ANDERSON
Over 15 years working in IT Held in a variety of technical roles before rising into
management – currently studying for my MBA Worked across many sectors including engineering,
manufacturing, transport, retail, high-tech,
management consultancy, finance, construction and
business services A ‘turn-around’ CIO
WHAT WE ARE
Davis Langdon is a multi disciplinary firm of client focused specialists, highly experienced in all areas of the built environment, with an in-depth knowledge of procurement, development, finance and construction delivery processes.
WHERE WE ARE
Davis Langdon are established in all major economic
clusters, nationally and internationally
QATAR
DUBAI
BAHRAIN
LEBANON
BRUNEI
CHINA
HONG KONG
MALAYSIA
PHILIPPINES
SINGAPORE
THAILANDVIETNAM
AUSTRALIA
NEW ZEALAND
SOUTH AFRICA
BOTSWANA
USA
SPAIN
POLAND
FRANCE
ENGLANDSCOTLANDWALES
EGYPT
KOREA
WEST AFRICA EAST AFRICA
IRELAND
CZECH REPUBLIC
Global reachGlobal reach Local deliveryLocal delivery
Europe/ Middle EastOffices: 33Staff: 1350
Asia PacificOffices: 18Staff: 960
AustralasiaOffices: 13Staff: 170
AfricaOffices: 14Staff: 160
USAOffices: 6Staff: 60
Risk appraisals/due diligence Feasibility studies Funding advice Property tax planning Strategic advice on design economics Development strategy
Affect decisionto build
Affect viability Design specifications/co-ordination Development/time/cost planning Value engineering and risk reviews Procurement strategies/management Tender and contract administration
“TIMING” - STRATEGIC ADVICE AND SERVICES AT CRITICAL STAGES OF A PROJECT
EARLY STAGE ADVICE
PRE-CONTRACT
Post Project audit Productivity/energy/efficiency studies Facilities/repair/refurbishment/management Change consultancy
Programme management Financial administration/project monitoring Change management Progress reporting Agreement of final costs Construction: Occupation interface
Affect returnon investment
Affect productivity/running / owning costs
“TIMING” - STRATEGIC ADVICE AND SERVICES AT CRITICAL STAGES OF A PROJECT
CONSTRUCTION
OCCUPATION
* Specification Consulting
* Environmental andEnergy Studies
* PropertyTaxation Advice
* International CostComparisons
* ConstructionMarket Studies
* Legal SupportServices
EARLY STAGE | OCCUPATION| PRE-CONTRACT | CONSTRUCTION
CONSULTANCY SERVICES *
We also provide value added consultancy and specialist services throughout a project’s life cycle:
“TIMING” - STRATEGIC ADVICE AND SERVICES AT CRITICAL STAGES OF A PROJECT
DAVIS LANGDON ENVIRONMENT
Flat structure – c. 30 cost centres (office & SBU) High degrees of autonomy Office domains Net profits = net drawings ‘Loose’ policies – influence and persuade Low value from Central Services (HR, Finance, IT) Duplicated services locally Increasing investments in IT Cost avoidance
HISTORY OF CHARGEBACKS
Borne in days of the mainframe Commoditisation led to devolution Crisis of control Centralisation solution Evolution of corporate IT Increasing economic cost pressures Demand for ‘value for money’ from IT Technological sophistication
KEY ELEMENTS
Why? Why does you need a chargeback strategy?
What? What do you include/exclude in the chargeback strategy?
How? How are you going to design, implement and manage your
chargeback strategy?
WHY?
Partner cost focus – net profit = personal drawings Complaints about current re-charges Unclear role of IT – engage and educate Benchmark service/cost against market Commitment to service – reveal nature of costs Consumer preference – ‘pay as you go’ Convert fixed costs to variable costs ‘Open bar’ to ‘cash bar’ – increased IT governance Run IT like a business – must add perceived value
WHAT?
DepreciationDepreciation
External External servicesservices
Support Support and and
MaintenancMaintenancee
DepartmenDepartment overheadst overheads
Staff costsStaff costsOperations staff/Development staff/Management & Admin staff
Training/travel/stationery/office costs/legal expenses
Hardware support and consumables/Software support and licensing
Voice network/mobile phones/wide-area network/firewall management
Hardware and software purchases (capitalised)Major projects (capitalised)
HOW?
IT led (not Finance) – service integration Utilisation – asset tracking and management Education – detailed monthly statements Value – account management
Individual/Office/Business Unit/Enterprise costs Apportionment method – capita/revenue/profit Build your own model
Desired behaviours & demands Company culture & maturity
Relate IT costs to business value
DEVELOPMENT PROJECTS
Development staff costs are problematic New approach required – demand driven Development proposals – commercial model Increased agility and responsiveness ‘Demand driven’ not ‘resource led’ Business unit ownership and valuation Income potential – reduce IT expenditure Relate IT investment to business value
BENEFITS
Business units have more information and can
operate more intelligently and autonomously – they
are educated and empowered to challenge Internal overhead departments see this as an
opportunity to evolve and align with the business –
change from focus on cutting costs to value creation Increased utilisation of IT and demand for greater
levels of performance
SUMMARY
An appropriate chargeback strategy is essential Ensure it is aligned with business needs and culture Focus on encouraging the desired behaviours in
Finance department Business users IT department
Not just about IT cost recovery Drives greater alignment Improved efficiency Value delivery
