Charge-back models and idealism

As a part of the student local interest group of itSMF, USA we recently had a knowledge session on ‘Financial management of IT services’, where we got a chance to discuss the topic and share ideas with a small group of students. As a good start to the discussion, we were more or less settled on the fact that for an IT service organization, the best way to charge its consumers is to have a usage based charge-back model. The model does the best to ensure transparency, visibility and control over all IT spending. Not just that, such a system is required to streamline the ITFM processes within the organization, identify cost optimization opportunities and to better forecast and plan for future.

Nothing comes without its cost however. We discussed the complexities involved in building a service catalog, which requires identifying the services offered, defining metrics, establishing tracking mechanisms, etc, etc. A lot of the discussion centered on the need for such a comprehensive charge-back model and whether the costs incurred can always be justified. It was interesting because most material available may advocate usage based charge-back as ideal for the IT service model; But not all of them look at the trade-offs.

And then I came across this article, which I thought presented a practical view. As rightly titled, what is fine in theory may not always work the best in reality. To quote Gartner analyst David Coyle from the article, “Chargeback adds overhead at a time when most organizations are being told to cut overhead. No one wants to hire accountants to handle chargeback.” Compromises and approximations are inevitable and what suits a particular scenario needs to be decided on a case by case basis.

'Open source' demystified

Image from anterotesis.com

Everyone’s first impression of open source software (OSS) concurs more or less with the Wikipedia definition- “practices in production and development that promote access to the end product's source materials”. Many a times, it is not uncommon to see the terms shareware, freeware and OSS used in a rather loose sense. I tried to read up and disambiguate the terms for myself; and here's a primer:

Public domain software – Software with no ownership or copyright whatsoever (Can’t think of any known example in this category.

Freeware or Open source software – Licensed software that is available for free; however someone does retain the copyright ownership for the source.  One can do most things as in a public domain software (modify, improve, customize), but are always legally bound by the terms of the license it is under. For example under the GPL license, licensees need to share their customizations with the community, thereby enforcing communal access to the intellectual property. With patents, license compatibilities, etc. the agreements can be quite complex and users (organizations in particular) need to clearly understand the implications of these.

Shareware – Licensed software that offers limited (in terms of usage, time, features, etc.) trial for free, eventually expecting a subscription or commercial contribution. An example which we use everyday is the WinRAR archiver.

All that said, we need to understand that the term ‘open source’ has come to address a broad philosophy than just a methodology. Along with the idea of shared source, comes the idea of community development. As observed by this blog the true value of sharing lies in the fact that other developers can modify and improve what already exists. At the same time, that doesn't mean that open source efforts will automatically produce better results or higher quality. Good project governance and best practices are still critical to drive results.