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Rationalizing socializing allocation_changes

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Every Service Costing Model Has to change at some point. When and How to rationalize and socialize those changes are important points to consider before the project gets started

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Rationalizing socializing allocation_changes

  1. 1. Rationalizing and Socializing Allocation Changes Copyright 2014 Thavron Solutions, LLC
  2. 2. Thavron Biases • Systems Thinking • Universal Business Service Model • Manufacturing and Supply Chain roots – Lean (MESA Lean Manufacturing Strategic Initiative Guidebook author, Toyota Method via GM/Delphi) • Modeling/Frameworks • Common Sense Copyright 2015 Thavron Solutions, LLC
  3. 3. Every Model is a Chargeback Model IT costs impact everyone’s bottom line. This makes any change in IT costs important. Copyright 2015 Thavron Solutions, LLC
  4. 4. What Causes IT Costs to Change? Consumption changes Data Changes Model/Allocation changes Copyright 2015 Thavron Solutions, LLC
  5. 5. The Business Changes their Behaviors • Changes in headcount • M&A/Divestiture • New products • Retiring products • Changes in process • … Copyright 2015 Thavron Solutions, LLC
  6. 6. When the Data goes bad • Data Linkages • Data Structure • Data Corruption Copyright 2014 Thavron Solutions, LLC
  7. 7. Validate with monthly processes • Regular governance processes – Fallout – Unexpected changes in source data – Technical failure – Include some feedback /corrective mechanism Copyright 2014 Thavron Solutions, LLC
  8. 8. Every Model will Change • Organizational Changes • Philosophical Changes • Infrastructure Type changes – Not linkages in the data • Service Lifecycle impact • Fundamental changes in source data Copyright 2015 Thavron Solutions, LLC
  9. 9. Everyone has a model Input Calculation Output Copyright 2015 Thavron Solutions, LLC
  10. 10. Not every change is an event • Define what is a material event for your company – Any change to budgeted charges? – Percent Variance tolerance ( 3-5% common) – Street impact measures Copyright 2015 Thavron Solutions, LLC
  11. 11. When it goes wrong…… • Business loses confidence in: – Model – Team – Process – IT Copyright 2015 Thavron Solutions, LLC
  12. 12. Pitfalls • Didn’t really understand the old method • Data changed between versions • Don’t really understand the new method • Model implemented wasn’t properly validated and was wrong Copyright 2015 Thavron Solutions, LLC
  13. 13. When It really is an event……. Copyright 2015 Thavron Solutions, LLC
  14. 14. When It really is an event……. Make it an Event! Copyright 2015 Thavron Solutions, LLC
  15. 15. The Ugly • Tedious • Financial Validations • Time/resource intensive if the changes are extensive • Excel will be your best friend Copyright 2015 Thavron Solutions, LLC
  16. 16. The Bad • Almost always time constrained • Finance Team does not have expertise to validate model code logic • People forget to budget for the staffing to test and validate • Team has never built or executed test cases before Copyright 2015 Thavron Solutions, LLC
  17. 17. The Good Success Stories – Change from no model , no services to implemented service costing – Change from infrastructure only charges to Business Service charges – Change from a “broken” model to “fixed” model – Migrate from one vendor system to another – Migrate from Excel to COTS package Copyright 2015 Thavron Solutions, LLC
  18. 18. How to make it work • Plan to Plan • High level Plan before you budget – How many moving pieces? – Availability and Condition of the data? • Be honest about the skills and capabilities of your own staff • Leverage internal expert knowledge in IT System change where possible • Training Copyright 2015 Thavron Solutions, LLC
  19. 19. What do you need? • Documented Use Cases for the system • Test Cases that are adaptable to work for before and after – If it is a full system change, will have to duplicate and update the test cases • Validate both the model logic and the outcomes • Have a plan and know what can be validated outside of the system • Socialization with the consumers Copyright 2015 Thavron Solutions, LLC
  20. 20. Socialization • Communication Plan • Communicate • Share the end tie outs – no need to drag everyone through the mud • Bundle it up and make it infrequent Copyright 2015 Thavron Solutions, LLC
  21. 21. Keys to Success • Clearly Defined Use and Test Cases • Plan for Testing and Validation • Know yourself and be honest about it • Staff appropriately Copyright 2015 Thavron Solutions, LLC
  22. 22. Discussion Copyright 2015 Thavron Solutions, LLC Follow up questions? Nan Braun nbraun@thavronsolutions.com 765.252.4509 / http://thavron.com /@ThavronSol

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