ACT Cost Study and Administration
The many benefits and advantages of transaction accounting should be obvious by this time. Equally obvious, however, is the associated cost of implementation and administration.
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Implementing and administering a transaction accounting system is equivalent in scope to implementing and administering an industrial manufacturing cost accounting system. Consequently, the associated manpower and potential organizational changes required for transaction accounting must be considered. The following points address the organizational and political considerations of transaction accounting.
Cost Study And Administration Group
Before you decide to evolve or migrate to transaction accounting, you should realize the overall importance and impact of that decision on your organization. We recommend that you establish a separate functional entity, which reports to the Director of Data Processing, to administer the transaction accounting process. It is not necessary, or even desirable, to have the personnel who maintain the resource measurement and cost accounting systems under the auspices of this group; however, regardless of where the personnel for those systems report within the organization, the cost study and administration group should be responsible for establishing guidelines and objectives for those systems. The responsibilities of this group should include:
- Defining accounting policy
- Defining operational specifications for resource management systems, cost accounting systems, and transaction logging facilities
- Identifying transactions
- Determining the standard cost and charging rates
- Periodically auditing existing costs and charges
- Negotiating charging rates with the user community
If transaction accounting is to be effectively employed, it is essential to realize the importance of this undertaking and properly delegate the authority and responsibility to the cost study and administration group. This high level of control is necessary because, once transaction accounting is implemented, it becomes an integral part of the data center's operation and effectiveness.
Standard Cost And Charge Procedure
As new applications are developed, an additional consideration is added to the application development responsibilities: accounting for the transactions (see the Transaction Logging Facilities section). It is the responsibility of the cost study and administration group to develop the costs and charges of the transaction prior to production operation. This effort is no different from that used in manufacturing processes today where pilot systems are tested and costed prior to implementation.
The considerations that may be included in the standard cost and charge procedure are:
- Identifying and defining the transactions
- Defining and implementing transaction logging facilities
- Implementing the necessary resource measurement systems (for example, if this is the first IMS application, an IMS transaction-based resource measurement tool will have to be installed)
- Integrating the resource management system data into the cost accounting system, with the necessary administrative tasks addressed to establish the appropriate cost explosion tables (see the cost Accounting Systems section)
- Determining costs and charging rates, and negotiating with the responsible user groups
- Integrating the charge-out system
While the initial rate determination phase for establishing an accurate and representative standard charge is an extensive and arduous project, it is a crucial one.
Periodic Cost And Charge Audit
Standard charges will, over time, fall out of synchronization with their actual processing costs. This can easily result from any of the following reasons:
- Modifications in the processing techniques of the applications systems
- Changes in the "projected" processing volumes upon which the standard costs and charges have been based
- Changes in the software and hardware configuration used to process the application systems
In attempting to consider this problem, there are several solutions to evaluate, including:
- Automated variance analysis, which reports significant variation between the standard and actual costs on an exception basis to the cost study and administration group. In this way, the group has a predefined list of those transactions that may require a rate change.
- Periodic samples of charges and costs may be used to determine whether a significant variation exists between the standard and actual costs. If a sample does find such a variation, you should pursue further measures and evaluation.
- User-requested rate evaluation may be required when a user seriously challenges the standard charges set by the data center. In this case, the transaction in question would be completely reevaluated from a cost and charging standpoint to determine if there is a discrepancy.
Each of the above mechanisms provides the cost study and administration group a means to evaluate and calibrate the standard costs and charges that are in use.