The Untapped Potential of IT Chargeback1
Authors: Ross, Jeanne W.; Vitale, Michael R.; Beath, Cynthia Mathis
Journal: MIS Quarterly (1999)
DOI: 10.2307/249752
The received wisdom on IT chargeback is that a chargeback system with certain key characteristics, such as usage-based charges, stable rates, understandable bills, and so forth, will help firms make effective decisions on IT investment and use. Eccles' model of transfer pricing provides a theoretical framework for this claim, and it also explains why chargeback systems can raise issues of fairness or create conflict between IT and its clients, as the IT literature has pointed out. Applying Eccles' model, this paper reports on a study of 10 organizations' IT chargeback systems and their impacts on business managers' economic decisions and on evaluations of IT and business unit performance. Respondents in just four of the 10 firms reported that chargeback had significantly influenced IT investment decisions. In addition, the business unit respondents at those same four firms offered more positive assessments of IT than their counterparts at other sites. These differences in chargeback-related outcomes could not be accounted for by looking at differences in the chargeback characteristics that are most commonly described in the IT literature. What was different in these four firms was…