Allocation

During a recession, or any kind of economic downturn, IT budgets come under close scrutiny. Organizations want to make sure that they are making the most of their money and IT investments are often among the first to be examined for potential cuts. Furthermore, the way that IT costs are allocated also makes a substantial difference because of the way different systems account for value. For example, under a traditional flat fee system, inefficiencies may be hidden and it can also negatively influence user behavior. This paper will look at some of the benefits and limitations in different accounting systems for IT services.

Flat Fee Structure

A flat fee structure is among the most common forms of IT allocation. The advantages of this system are that it is much simpler to work with. For example, bundling all of the fixed costs into one cost pool can make accounting and...
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