What are the typical approaches and best practices when allocating centralized IT costs (e.g., network, cell phone, software) to company divisions and sites/projects? Is it more common to use company revenue, headcount, or other factors as a basis for cost allocation, considering that the traditional, application-level user base allocations have become unwieldy due to the numerous user lists?

7.7k viewscircle icon1 Upvotecircle icon4 Comments
Sort by:
Oracle ERP System Analyst / Accounting Manger in Retail2 years ago

Individually identified equipment such as cell phones, network equipment at a location, etc., are charged to the location the employee works at. IT costs that are truly for company-wide initiatives (i.e., software used by all locations) are allocated to overhead which then gets allocated only across companies (versus down to a location-level). We found this model is the easiest for our company to maintain since we have over 1k locations.

Leader2 years ago

You can use an ABC model based approach!
Using all sources : spendings, spends, direct or indirect, timesheets
Modeling and mapping to relate to what services and product these spendings contribute to and also use allocation keys to allocate mutualized or transversal costs. 
This kind of approach is working well if complexity of mapping and rules of allocation are kept simple

Senior Data Scientist in Miscellaneous2 years ago

As long as the costs can be related directly to the corresponding business unit (e.g. mobile-phone / software /  -> assigned employee -> assigned business unit) it might be related directly. Otherwise one supposes them to be covered by the overhead.

Lightbulb on2
Network and Security Architect team lead in Finance (non-banking)2 years ago

It really depends - Orgnizations allocate the funding based on its orgnizational goals and objectives. Different divsisions are asked to identifiy areas where investment is required for business growth, improving user experience, security and compliance and then funds are allocated based on the priority keeping in view business growth.

Lightbulb on1

Content you might like

Very high impact31%

Somewhat high impact38%

Neutral20%

Somewhat low impact1%

Very low impact8%

No impact at all

Not sure

View Results

Zapier29%

KonnectzIT28%

IFTTT20%

Make (Integromat)7%

Other please specify14%

View Results