Strategies for Cost Accounting

Shared IT Infrastructures - Complete Controller

One of the most critical aspects of every business is allocating costs. Cost accounting has increasingly become the critical focus where IT infrastructures are being constructed. For example, keeping sight of budget limitations, funds allocated to computers, networking, and communication hardware make up almost one-third of the IT budget. 

It is usual for infrastructure costs to be determined by the number of units a business has and how they are placed in the cost allocation plan (CAP). All assets are used according to the roles of the business units, so a simplified cost allocation plan is implemented in which servers and networking infrastructures are allotted accordingly. The latest technology now enables user-based cost accounting using enterprise software that leads to pricing bliss. Check out America's Best Bookkeepers

IT infrastructures, especially enterprise software architecture, are designed to use multi-tier client-server applications. With such a vital and complex need for essential software, the determination of allocating costs becomes perplexing. Once assets are inducted into a business unit, both hardware and software costs are dedicated and preserved as direct costs.

Using an asset in a shared environment per resource capability has been seen in business today. DCHP, ISA, Database, Application, email, hosting, and cloud servers are among many. In such environments, the cost driver is determined by the workload produced by clientele and the consumption of resources in IT infrastructure for cost accounting.

For instance, an application server can host dozens of applications. Still, other scenarios where the same server would host two or three applications according to the function it carries out, like email servers. As servers are part of a solution and not a standalone product, it is a more extensive IT system layer.

Usually, all such software and hardware come in tiers, and one is needed to run the other within the IT infrastructure. A cost accounting method would diminish significant problems and obstacles while providing other assets with more resources to utilize. For instance, 3-tier database applications consist of three servers, i.e., web, application, and database servers, which can all be shared to perform various duties for different applications.  

This raises concerns that application owners would have to handle most of the costs as direct costs while other users would utilize them. Therefore, a usage-based model would be advantageous to implement, as costs can be allocated to owners or even users to produce more transparency. It may even determine consumption-based cost accounting keys for allocation in any IT infrastructure.

Simple Ideas to Determine Usage-Based Cost Allocation Keys


Identification of costs is an organizational practice that distributes cost allocation. This focuses on making IT costs identifiable and ensuring proper assignment to accounting objects, such as IT services.

It also makes assessment and evaluation easier. Forecasting and decision-making are also somewhat straightforward and simplified. Also, it helps with cost recovery, which is setting prices of IT Services and charging the units using them. One objective is to determine incentives, for instance, to regulate supply, cost-conscious behavior, and IT services demand. Check out America's Best Bookkeepers

Resources profiles for cost accounting in IT infrastructures

From the customer’s point of view (business units, users), the complex software and hardware integration is not genuinely understood in some cases. They view it as a box that uses GUI software to provide services. Categories can include execution of the transaction, such as stock or order, and information access, like retrieving and storing details.

There could be several selections of one or more of such services, and some services consist of several applications, resulting in similar resource consumption in an IT infrastructure. 

Resource estimation

For significant cost accounting purposes, existing tools needed for profiling resources in the heterogeneous environment have drawbacks. Firstly, performance diagnostic problems and technology and vendor-specific tools do not cover all resources.

The service profiler tool is a load generator that uses standard monitoring tools of UNIX, Linux, and Microsoft Windows. These OS Tools help in detailed monitoring. Several other tools are used for resource profiling, which helps prepare an overview of resource consumption expectations for various user behavior patterns.

Evaluating queuing network theory

For cost accounting allocation keys using resource profiles, profiles must be independent of the system’s workload or services. These are excellent tools for validating assumptions. By accurately predicting resource utilization, it is safe to assume that estimates are accurate and independent of system workload.

Other vital work

Service-level resource profile needs are well substantiated in cost accounting. Funke, Scheeg, Nagaprabhanjan, and Apte have published individual works in cost accounting and IT Controlling.

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