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With personnel accounting for more than 40% of the typical IT operational budget, properly allocating personnel time and expenses to projects, tasks, or service delivery is vital for managing IT costs and pricing IT services.
Nevertheless, many organizations do not keep track of where IT personnel are spending their time. Figure 3 from our full report, IT Personnel Time Tracking Adoption and Best Practices, shows that only 28% of organizations track IT personnel time formally and consistently. Another 9% track the time of their IT personnel formally but inconsistently. Finally, another 19% track their personnel on an informal or ad hoc basis. Surprisingly, over one-third do not track IT personnel time in any way at all.
One way to achieve cost transparency is through detailed cost accounting, such as tracking IT personnel time. The use of such activity-based cost accounting to attribute direct and indirect costs to various business activities has many advantages, including improved project estimating, more accurate chargeback accounting, better allocation of resources, greater cost transparency, and better alignment of IT jobs.
“It’s hard to imagine how a CIO can be in control of IT costs without tracking where IT personnel are spending their time,” said Tom Dunlap, director of research for Computer Economics, an IT analyst firm based in Irvine, Calif. “Time tracking may put a small burden on IT personnel to record their time, and there is always the risk that they might perceive it as micromanaging. But those are things you can overcome if you roll it out properly and communicate the goals and benefits.”
In recent years, efficient time- and expense-tracking solutions have been introduced, either as specific solutions for tracking time and expense of IT personnel or as solutions for workforce management in general. Many are cloud-based applications, making IT personnel time tracking a fairly straightforward system to deploy. Perhaps as a result, time tracking by project, task, and/or IT service has become a more standard practice in the industry. However, there is still significant room for the practice to grow.
Companies interested in a technological solution can select an IT personnel time-tracking solution as a stand-alone product or as part of a larger suite of ITFM offerings, a professional services system, or a project management solution. We review many of the best options in the full report.
IT personnel time tracking is one of six best practices in our IT financial management group. With the desire to achieve greater transparency and accountability for IT expenditures, IT organizations are adopting these practices to improve cost accounting in conjunction with the delivery of IT services. In addition to IT personnel time tracking, IT financial management practices include service-based cost accounting, chargeback of IT costs, showback of IT costs, IT service catalog, and benchmarking IT spending levels.
In the full report, we look at adoption trends for tracking IT personnel time by organization size and sector. We also discuss the benefits that IT organizations experience when they establish this practice and outline recommendations for effective implementation.