Chargeback ROI: Does accountability pay?

Chargeback for storage use is attracting a lot of interest. But does it make sense financially?

Without a doubt, chargeback for storage use is attracting a lot of interest. But does it make sense financially?

Chargeback can save enterprises money, says IT ROI expert Tom Pisello, CEO and founder of Orlando, FL-based consulting firm Alinean, but only if it slows storage growth dramatically.

Pisello looked at what storage growth costs companies today. For example, a company with 1TB of storage today will increase that figure by 76% this year, or about 760GB, he projects. With a TCO of about $0.20 to $0.30/MB per year, 760GB of extra storage will cost about $200,000.

Then, Pisello looked at how much a chargeback program costs to establish: 25% of a storage professional's time ($25,000, assuming $100,000 annual salary and overhead), and 100% of an administrator's time - or about $75,000.

The bottom line? If the chargeback program manages to hold the line on storage use, a company could get back $1.66 for every $1 spent on accountability, Pisello says.

But if chargeback only slows growth by a realistic 40% to 60%, it's a toss-up whether chargeback is worth the hassle. "If you still get 40% of the growth in usage," he says, "the case is marginal."

- Anne Zieger

This was first published in July 2002

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