IT Service Accounting

Accounting in IT services differs from normal business financial accounting as it requires the recording and analysis of extra data.

As an organisation may offer and consume multiple services the service an item relates to must be recorded.  Each service will usually be given an identifying code to differentiate it from other services.  In many way this is similar to accounting in a 3PMO (Portfolio, Programme and Project Management Office) where each Project will have a code identifying the Portfolio and Programme within that Portfolio that it belongs to.

The type of cost will also be recorded.  Types of cost may include: Hardware; Software Licenses; Support and Maintenance contracts; Labour; Administration.

Costs will typically be classified as to whether they are Direct (charged to the end user business area)  or Indirect (charged to some corporate function which may adsorb the cost or pass it on to end user business areas, this typically happens where a service is used by multiple business areas so the sales system service will usually be billed directly to the Sales team where as email will be billed to the corporate office which will then bill each business area based on number of users); Capital (purchase of fixed assets that the company owns, could sell, and are subject to depreciation) or Operational (costs associated with the process of carrying out business or recurring costs for things the company does not own such as rent or salaries); Fixed (cost that does not depend on use such as line rental for phones or base salaries) or Variable (costs that vary with use such as overtime pay or phone call charges).

Cost units, the unit of consumption, can be important as they tell the business what they are actually paying for.