Chargebacks: Bureaucratic Nightmare or Market Economics?
what it takes to make chargebacks useful

Abstract

Often, chargebacks are implemented strictly for cost-accounting purposes; and generally this leads to an administrative nightmare and a client backlash.

Properly implemented, chargebacks moderate demand by giving clients the information they need to decide what's worth buying from internal suppliers like IT. They also balance supply and demand by defining what products and services can fit within available budgets.

Achieving this market effect takes more than just publishing a price list and transfering costs. You have to set up the market dynamics, including business processes whereby clients consciously manage a portfolio of investments.

This presentation gives an overview of all the components needed to implement the kind of market-based internal economy that makes chargebacks effective. It also defines a low-risk, step-by-step evolutionary path to implement a market economy with or without chargebacks.

Outline

* Defining chargebacks (versus allocations)

* What goes wrong: chargebacks as an end rather than a means

* The concept of an internal marketplace

* The evolutionary stages of an internal economy, and the prerequisites of each

* Practical next steps: how to get started on the path to a market-based internal economy

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