Why the rest of the departments are "clients" of the IT Department ?

[Zorba]

We're starting to see it come through in all this SOA stuff as well - now, not only can you give the canteen away to some ripoff merchants but you can even get rid of your invoicing, letter opening, manufacturing etc etc once you've compartmentalised your business into enough chunks, and simply retain the 'core business' or 'value-add'.

[BrowneIssue]

The 'internal market' concept came in in the UK with the 1990s, just as the Merkins were giving up on the idea.

It was a very efficient way of laying off whole departments at a time by being able to demonstrate that a given department cannot "pay its way".

Cute departmental managers with some business-savvy quickly sussed that by operating this way, you could stop messing about with the traditional annual budget bun-fight and just keep charging all year round.

Surprise, surprise, and contrary to popular belief, IT departments (with all their business analysts, business-knowledgeable developers, managers that implemented all the existing business systems, experienced testers and so on) actually could do this very well.

So a lot of departments got themselves laid of or outsourced (e.g. who has an internal transport dept / building services / canteen any more?) while IT managed to survive in many places by using the internal market concept to prove their worth.

So it is not that IT departments are weird, it is that IT departments survived.

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There you go. Something positive to start the day with. Be proud to work in an industry that - despite the media hype - isn't actually all that bad (HMRC excepted, of course.)

[thunderlizard]

I think the internal market is an American idea, and I'm surprised it's remained as prevalent as it has. It's nice and easy for the accountants, but in 90% of companies it's a joke because the IT/HR/whatever department remains the monopoly supplier to the rest of the company so you never get the efficiencies that were intended. Therefore the internal billing rates go way below or way above open market rates: but nobody cares because it's all off-balance-sheet play money anyway.

[Denny]

Something I don’t get.

The larger clients, I worked for, have their internal IT department arranged as, almost, self-sustaining business that sells its services to the rest of the business. In other words the other departments of the company are “clients” of the IT department.

More over IT Department’s services like , File Servers , Email , Support Desk , etc are being billed for to the other Departments. How the IT department bills the other departments where all departments are internal to the company ?

Why is this biz model employed with big companies ? Is it an ITIL thing ?

No. Support functions that service an entire corporation often charge specific business units for their services, not just ITIL. Each business unit has their own cost centres. It's a business model than is more prevelant these days and is justified in terms of keeping costs to a minimum and to make resourcing requirements more transparent.

[2uk]

Something I don’t get.

The larger clients, I worked for, have their internal IT department arranged as, almost, self-sustaining business that sells its services to the rest of the business. In other words the other departments of the company are “clients” of the IT department.

More over IT Department’s services like , File Servers , Email , Support Desk , etc are being billed for to the other Departments. How the IT department bills the other departments where all departments are internal to the company ?

Why is this biz model employed with big companies ? Is it an ITIL thing ?