IT Chargeback Models for Office 365

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IT Chargeback Models for Office 365

IT Chargeback Models for Office 365

Office 365 IT Chargeback model

You’ve heard the complaints from company business units many times before: IT costs too much. I have no idea what I’m paying for. I can’t accurately budget for IT costs.  The problem is that different business units can perceive IT operations as just a black box. In recent years, however, IT chargeback systems have attracted more interest as a way to address all those concerns by providing very accurate billing reports for services provided.  And that drive for accuracy has moved to software licensing now with the advent of cloud services.  Software vendors like Microsoft can now identify exactly how many licenses are consumed by their customers because it is being hosted within their managed cloud.  Any organization using Office 365 assigns software licenses directly to user accounts in the cloud.  This opens the door for very accurate internal IT chargeback since that information is readily available, if customers can find a good way to track it and accurately report on it, that is…
This blog series will cover the following topics on using chargeback accounting effectively for Office 365 related costs.  The first blog information will be included below, followed by the additional entry in the weeks to come.
    1. Chargeback Accounting for Office 365
    2. Example Chargeback Reports using 4ward365

Direct Chargeback for Licenses Consumed

The simplest model to implement chargeback for Office 365 is to assign billing codes to each user account and then cross-match the licenses utilized by those accounts. Then you just have to create an editable pricing table for the different types of licenses, and you’re in business.  But things are never quite that simple.  The admin center portal has no easy way to track licenses assigned to users, and there are absolutely no pricing tables for licenses included in the admin center to make your life easier. So, that leaves you with spreadsheets and Powershell export scripts to setup your own billing system. It can be done, but wow is it ever a headache to process these on a monthly basis.

Riding to the rescue is 4ward365 and the integrated chargeback accounting features it provides. Within 4ward365 you can easily track exactly what licenses are assigned and utilized, plus you can create license pools delegated to different business units so they can be responsible for managing their own license distribution. These license pools also allow you to set hard limits on the number of licenses that a business unit is allowed to assign. When they reach their full allotment of licenses they won’t be able to take licenses from the general, corporate account any longer. Instead they must request additional licenses, or recover inactive licenses from old user accounts under their license pool. This puts the IT group in complete control over what licenses are distributed and who is paying for them.
Screenshot of License Pools Assigned to Geographic Sites
 License Pools Assigned to Geographic Sites
These license pool control mechanisms are extremely useful for large, distributed organizations, or government entities that have many different agencies.
Once you have your license pools setup correctly, and you have selected a billing attribute from Active Directory, such as billing-code, company or department, you can then move on to the next step.
To match the costs per license you just need to update a license table in 4ward365 (see below) to associate the appropriate costs for each type of license.
Screenshot of Pricing Table for Different Licenses
Pricing Table for Different Licenses 
After that step you are home free. You can now create any type of billing report you want and categorize it by business unit, geographic location, or whatever you wish. These billing reports can be setup to run on a regular basis and you can automatically send them to the department managers to keep them informed of their chargeback commitments. These reports can easily be exported and made available for corporate billing systems to process.

Adding IT Support Costs to Chargeback

Another common chargeback model is to add in the associated costs for on-premises support and administration of Office 365. These commonly include a portion of the helpdesk costs and IT administrators who help manage the Office 365 environment. To include those additional costs, it is a fairly straightforward exercise.  First, identify the FTE cost for the number of resources, and then divide that by 12 months to distribute it for monthly chargeback. Then divide that monthly cost by the total number of users in the organization. This provides a good estimate for the individual support cost per employee. Take that small number and add it to the current cost for each of the Office 365 license plans (E1, E3, etc.) in 4ward365 so that it is distributed evenly to all users. Now when you run the monthly billing reports it will include the chargeback for both the Office 365 company fees along with the internal IT support costs.

Summary of Chargeback Models

The admin center portal was never designed for chargeback accounting purposes. It would take an enormous development effort to create a billing system for Office 365 through the use of Powershell scripts and custom spreadsheets, not to mention the countless hours to perform the processing cycles each month. To help customers easily setup a chargeback process, the 4ward365 solution has all the built-in functions necessary.

Today 4ward365 is the only all-in-one management solution for Office 365 that can help organizations setup an accurate IT chargeback accounting process. And a bonus for multi-national organizations, the 4ward365 interface is easily configurable in multiple languages to accommodate different admin teams from around the world.
If you are interested in finding out more about our 4ward365 solution and how it can help you configure internal chargeback for your Office 365 deployment, please visit our overview page online, or sign-up for a free trial.
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Carl Baumann

With more than 19 years of experience assisting business’ transition to Microsoft solutions, Carl has become a trusted advisor to Microsoft’s worldwide customers and partner ecosystem. He has assisted numerous Fortune 500 companies implement highly successful Office 365 business transformation projects.